House members support bill on futures trading

JAKARTA (JP): Members of the House of Representatives, except those from the United Development Party (PPP), pledged yesterday to fully support a bill on domestic futures commodity trading.

Representatives of Golkar, the Indonesian Democratic Party, and the Armed Forces supported the bill, saying it would help prevent sharp price fluctuations and facilitate trade amid globalization.

But the PPP faction questioned the bill's urgency, arguing that other bills such as those on anti-trust and fair competition were much more essential.

The other three factions said the bill was important because it would set up a legal foundation for domestic futures trading, which was now being practiced illegally.

The PPP House members expressed their concern that the bill might further encourage monopolies.

They asked the government, which was represented at the plenary session by Industry and Trade Minister Tunky Ariwibowo, why the bill on futures trading was considered more urgent than the ones on anti-trust and fair competition.

The PPP faction criticized the country's current market conditions which, it said, were the result of "ineffective government control of monopolies, oligopolies and duopolies".

Responding to the criticism, Tunky said the bill would require transparency in transactions so that those involved in trading would not be able to do so unfairly.

The bill on the futures commodity exchange was submitted to the House late last year after a long delay caused by controversy over the futures market. Many people opposed futures trading, arguing that it was gambling.

The futures exchange is expected to involve about 25 brokerage companies, including members of the Indonesian Coffee Exporters Association and Indonesian Edible Oil Association Federation. The exchange will be supervised by the Commodity Exchange Board.

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

The company concluded that the exchange would cost between US$5 million and $10 million to set up, and $1.5 million to run each year.

The company also estimated that a break even point could be reached in two to four years of operation, if fees for each transaction were set between $2 and $5.

At the House session yesterday, representatives of the four factions expressed concern that foreign investors may monopolize the futures bourse.

They also wanted an explanation on the role of the Commodity Exchange Board in the futures bourse, which was not clearly stated in the bill. (02)