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)