Govt to submit bill on futures bourse

Govt to submit bill on futures bourse

JAKARTA (JP): The government will submit a bill on futures
commodity trading later this month to the House of
Representatives, Commodity Exchange Board chairman Arifin Lumban
Gaol said yesterday.

"We expect the bill will be approved by the House after four
months of debate," Gaol said at a futures-trading workshop.

The bill would create the legal foundations for a domestic
futures commodity market, which the government planned long ago
but postponed because of its controversy.

Many people have opposed the market, arguing it was gambling.

Gaol said it was high time Indonesia had its own futures
commodity market to improve economic efficiency and
competitiveness amid free trade.

According to the proposed bill, the futures market will be
operated by private companies under the Commodity Exchange
Board's supervision.

Members of the Indonesian Coffee Exporters Association and
Indonesian Edible Oil Association Federation have agreed to
operate a futures bourse.

Sparks Company of the United States was commissioned by the
Indonesian government, World Bank and two commodity associations
to study the feasibility of a domestic futures exchange.

Sparks Company concluded a futures trading exchange would cost
between US$5 million and $10 million to set up and $1.5 million
to run each year.

A break-even point could be reached in two to four years of
operation with fees for each transaction set between $2 and $5,
the company said.

Gaol said four Indonesian commodities had potential to be
traded on the exchange: coffee, crude palm oil, rubber and cacao.

But only the Indonesian Coffee Exporters Association and
Indonesian Edible Oil Association Federation have pledged full
support for the futures trading plan.

"But the bourse won't be monopolized by the two associations.
If interested, other commodity producers would be allowed to sell
their produce there," Gaol said. (jsk)