Govt sets up BAPMI to protect investors

Dadan Wijaksana, The Jakarta Post, Jakarta

Minister of Finance Boediono introduced on Friday an arbitration body that will serve as an out-of-court mediator to help resolve investment disputes in the capital market, a step the minister hopes will go a long way toward protecting investors.

Boediono said he expected the new body, called the Capital Market Arbitration Body, or BAPMI, to perform with a high degree of credibility in helping to regain investor confidence in the local capital market.

"BAPMI will serve as a complementary institution to the courts. But it must maintain its credibility to obtain the trust of investors," he said.

The presence of BAPMI should help both investors and publicly listed companies avoid having to go to court to settle disputes, which would save them both money and time.

The Indonesian Investors and Securities Community (MISI) hailed the establishment of BAPMI as a breakthrough, saying investors had been waiting for a body like this.

"Investors will no doubt welcome this move," said MISI chairman ND Murdani, pointing out that settling disputes via BAPMI was expected to be speedier and less costly than the courts.

The Capital Market Arbitration Body was established based on Law No. 30/1999 on arbitration, and will join existing similar institutions such as the Indonesian Arbitration Body and the Bank Muamalat Arbitration Body.

To ensure effective and efficient dispute settlement, the majority of BAPMI members will be independent professionals, including some from the Capital Market Supervisory Agency.

The chairman of the new body is A. Zen Umar Purba, a senior legal consultant for the capital market.

Boediono stressed the importance of BAPMI, particularly at a time when the country's capital market has failed to become a major investment target of both foreign and domestic investors.

"The Indonesian capital market should be able to become a pivotal factor for economic recovery if it can lure plenty of investors," he said.

He said the country's lack of progress in legal reform also contributed to investor reluctance to look toward Indonesia as an investment destination.

The country's commitment to legal reform has long been questioned, with investors complaining about legal uncertainty arising from everything from impotent regulations to the failure to honor legitimate contracts.

Fresh in the memory of investors is the controversial decision by the commercial court to declare the local unit of Canadian- based insurance firm PT Asuransi Jiwa Manulife Indonesia bankrupt. Following protests from the Canadian government and the intervention of the Indonesian government, the Supreme Court annulled the bankruptcy ruling.

"That (case) shows that the current pace of legal reform has yet to live up to the people's expectations," Boediono said.

That is why, he added, the establishment of BAPMI as an alternative for settling disputes should receive the full support of all related parties, to help provide comfort to investors.

BAPMI Working Plan

1. Determine the organizational structure and culture of BAPMI in accordance with existing rulings.

2. Develop sustainable programs aimed at promoting BAPMI among capital market players.

3. Develop BAPMI in such a way as to cooperate with other similar institutions, in accordance with Law No. 30/1999 on arbitration and dispute settlement alternatives.