House members support bill on futures trading
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)