Tue, 23 Aug 1994

Funds on capital mart reach $5.7b

JAKARTA (JP): The funds mobilized through the country's capital market is expected to nearly double to Rp 12 trillion (US$5.7 billion) this year from Rp 6.8 trillion in 1993, says the president of the Jakarta Stock Exchange (JSX).

Hasan Zein Mahmud said yesterday that in the first seven months of this year alone, the public funds raised through the capital market already exceeded Rp 8 trillion.

"This year's fund mobilization will be higher than that recorded during the market boom in 1989, when around 60 new issues were listed," he said.

He said the sharp increase in fund mobilization is possible due to the significant rise in the number of new issues and the increase in the volume of limited public offering (rights issuance).

Hasan said 17 new issues were listed in the January-June period and that the number is projected to increase to around 30 by the end of the year, rising from only 19 new issues last year and 14 in 1992.

The market capitalization is also expected to increase to between Rp 100 trillion and Rp 120 trillion from Rp 69.3 trillion last year.

He expressed optimism that the capital market would play a more important role in funding the country's economic activities in the coming years.

Indonesia needs at least around Rp 660 trillion ($315 billion) to maintain its economic growth of at least six percent during the current five-year development plan period. Around 75 percent of the required investment funds are expected to come from the private sector.

Hasan acknowledged that the stock trading activities are still dominated by foreign investors.

The number of local investors are less than one percent of the country's 188 million people, he said, adding that the number is still very small as compared to around three million of local investors in neighboring Malaysia.

He hoped the number of local investors in the country would increase in the coming years in line with the government's intensive campaign in attracting the public to enter the stock market.

The government's recent decision to allow the operation of open-ended investment funds is expected to further encourage local investors to invest their money in the capital market, he said. (hen)