House debates on futures exchange bill dragging

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo said yesterday he had no intention of canceling a special team assigned to set up a futures commodity exchange despite objections from members of the House of Representatives.

Tunky told a hearing with the House Commission VI for industry, mining and manpower that he would only agree to revise the ministerial decree he had issued for the team's establishment.

"I don't think the decree (No. 393/1996) will benefit certain people. It is merely intended to prepare for the creation of the futures exchange," he said.

House debates on a bill on futures commodity trading have become lengthy because legislators and the government have failed to reach an agreement on whether or not the team was needed at this stage.

Ministerial decree No. 393/1996, issued last year by Tunky, stipulates that the team -- consisting of government officials and executives of private companies -- would prepare the establishment of a futures commodity exchange.

Tunky has said that although the team went into effect from the day the decree was issued, it was in fact unable to operate before the bill on futures commodity trading was passed into law.

Therefore, he said, he would agree to postpone the implementation of the ministerial decree until after the bill was passed into law, but would not dissolve the team altogether.

Legislators have objected to the establishment of the team saying it should not precede the passing of the bill.

They have also accused the government of colluding with the private sector by involving company executives in the team.

The issue has prolonged discussions on the bill and postponed its passage.

The long-awaited bill was submitted in December and deliberations have continued since then.

The government has promised that the private sector would play a major role in running the exchange while the government, through a Commodity Supervisory Board, would supervise it.

The government has not yet set up the board but it is likely that the Commodity Bourse Executive Board, which operates the country's commodity exchange, will take on the supervisory task.

The supervisory board, according to the bill, will have the right to make technical rules, provide licenses to the exchange's brokers, carry out investigations and approve regulations issued by the exchange and its clearing and guarantee agency.

The board will stipulate financial requirements and impose administrative penalties on violators of the futures commodity trading law, if the bill is passed.

Some observers, like the legislators, fear that the market will be dominated by groups such as members of the Association of Indonesian Coffee Exporters and the Federation of Edible Oil and Fats, which produce the commodities that are likely to be the first to be traded on the futures market. (pwn)