Foreign issuers will be allowed here next year
Foreign issuers will be allowed here next year
JAKARTA (JP): Foreign companies will be allowed to float
shares on Indonesian stock exchanges next year, Felia Salim, a
director of the Jakarta Stock Exchange (JSX), said yesterday.
Felia told journalists during a break in a seminar on the new
stock market law at the Borobudur Inter-Continental hotel that
the JSX is currently drafting the ruling on listing procedures
for foreign companies.
"However, the draft still needs the consent of the Stock
Market Supervisory Agency (Bapepam) before it comes into affect,"
Felia said.
As an international-level stock exchange, Felia said, the JSX
should follow the global trend of equity movement.
She said that neighboring stock exchanges, such as the Kuala
Lumpur Stock Exchange and the Thailand Stock Exchange, have moved
toward allowing the listing of foreign firms on their markets.
"It will benefit both local and foreign investors if foreign
companies are allowed to list their shares here. They will have
more choices to buy the best shares," Felia said.
Concurring with Felia, economist Christianto Wibisono said
that by allowing foreign companies to enter local markets, the
stock market law will help create more competition among share
issuers on local markets.
"I fully agree with the entrance of foreign companies into
local markets because it could stop the arrogance of local share
issuers," said Christianto, who is also chairman of the
Indonesian Business Data Center.
Law
According to the explanatory notes on point 15 of article 1 of
the new stock market law, both local and foreign companies can
conduct public offerings of their shares on local stock markets.
The law was endorsed by the House of Representatives early
last week and is expected to come into effect early next year.
While applauding the passing of the new law by the House, JSX
president Hasan Zein Mahmud criticized certain articles of the
law, which, he said, may cause "set backs" in the country's
future stock markets.
He said that the law gives Bapepam excessive control over
local stock exchanges. It provides for Bapepam to be involvement
in the election of members of the exchanges' boards of management
and commissioners and in the preparation of the exchanges' annual
budget.
"According to the rule of thumb, the management of the JSX is
responsible to Bapepam in relation to its public services, while,
in relation to financial responsibilities, the management should
be responsible to shareholders," Hasan said.
Point 3 of article 5 of the law stipulates that the stock
exchanges' annual budget and the use of its profits have to
follow Bapepam's guidelines and have to be reported to the
agency.
Another "set back" in the law is that its gives
responsibilities to local stock exchanges in managing stock
transactions, trading settlements and ensuring efficient flows of
deals but does not give them the necessary rights to control
professions and institutions involved in those activities, Hasan
said.
"Instead, the law extends all the necessary controlling rights
to Bapepam," Hasan said. "Thus, Bapepam turns out to be the most
powerful institution in the capital market."
A similar criticism of the "powerful" Bapepam was voiced by
lawyer Todung Mulya Lubis and economist Rizal Ramli.
Mulya said at an earlier stock exchange law seminar on
Wednesday that the law gives excessive power to Bapepam, without
conferring full independence on the body.
Supporting Mulya's argument, Rizal, who is chairman of the
Econit economic research group, said Bapepam needs a strong group
of professionals with good salaries to exercise the agency's
control over stock market-related institutions and professions.
"If not, I'm afraid, a number of Bapepam's officials will
misuse their power for personal gain," Rizal said. (rid)