Futures commodity trading may start next year

JAKARTA (JP): The government has begun working on the implementation of a law on the futures commodity exchange, which is expected to start operating next year, an official said yesterday.

The chairman of Indonesian Commodity Exchange Board, Arifin Lumban Gaol, said the board had started to set up the legal structure on the implementation of the law, which was passed by the House of Representatives in December.

"We have met several times to establish the draft regulation on futures trading," Arifin said.

He said he expected the setting-up process would be completed within a year or two.

"This will be in line with our economic recovery, so the bourse will be more dynamic then, compared to if we were to begin during the current crisis," he said.

Minister of Industry and Trade Tunky Ariwibowo said earlier he expected the futures commodity exchange to begin before 2000.

Arifin said a presidential decree would officially determine which commodities would be traded, as well as the formation of the supervisory board of the futures exchange.

The setting up of regulations and the legal structure of the institution would be followed by the establishment of the futures commodity exchange, which would be managed by a private company.

Coffee and palm oil will be the two main commodities to be sold in the market. Others include rubber, pepper, cocoa, plywood, shrimp, soybeans, cotton and clove.

Futures trading will be overseen by the new supervisory board which will be working under the authority of the Ministry of Industry and Trade.

Daily trading will be operated by bourse management and commodities clearing house PT Kliring dan Jaminan Bursa Komoditi, and commodity traders and brokers will work under the two institutions with commodity buyers.

The board will also set up a separate division called Sentra Dana Berjangka within the market, which will manage the funds of buyers with less capital.

"Sentra Dana Berjangka is equal to mutual funds in the stock market, it will pool the funds of small buyers and invest them," he said.

Arifin said the board received a lot of technical assistance from foreign parties to establish the exchange market.

The United States Agency for International Development has sent Joseph Dial, a former member of the supervisory board of the United States Commodities Futures Trading Commission, to Indonesia to help assist the board from Jan. 15 to Jan. 21, he said.

The organization would also send four more consultants to help the board, he said.

He said the bourse's supervisory board would also get assistance from the United Nations Conference on Trade and Development, the Asian Development Bank, the World Bank, and Australia Aid. (das)