Indonesian capital market ready to tackle millennium bug

JAKARTA (JP): The country's capital market and its supporting institutions are all prepared for the millennium bug, according to the Capital Market Y2K Implementation Committee.

Committee chairman Surdiyanto Suryodarmodjo said on Wednesday that investors did not have to worry about possible disruptions in stock trading activities in the new year as trading systems at both the Jakarta and Surabaya stock exchanges were 100 percent Year 2000 (Y2K) compliant.

The Indonesian Clearing and Settlement Agency (KPEI) also achieved 100 percent Y2K compliance in its computerized clearing system, he said.

Surdiyanto acknowledged that the Indonesian Central Securities depository (KSEI) had not complied but he said that it would not affect overall transactions because the institution still used manual systems in daily operations.

He said two-thirds of the 186 securities companies had completed and passed a process of final testing for Y2K compliance. The remaining one-third were declared free from Y2K effects because they were using manual and semimanual operating systems.

The Y2K bug, which stems from a common programming practice which only uses two digits for the year, strikes Jan. 1. Computers that are not updated could mistake '00' as 1900. The error could create problems ranging from power outages to billing errors.

Surdiyanto said the committee also prepared a business contingency plan (BCP) to anticipate possible trading disruptions in the new millennium.

"We now have to make sure the securities companies passing the Y2K test have an acceptable BCP," he said, adding that the scheduled review would be conducted from Friday through Sunday.

In the overall capital market contingency business plan, there are four alternative steps for anticipating the coming Y2K bug, he added.

The first alternative step was to overcome the Y2K problems and go on with the current system. The second was to switch to a prepared back-up trading system. The third was to use the Internet facility through the "software-based multilateral netting". And finally, if all the above still fail, the Jakarta Stock Exchange (JSX) would go back to using manual trading, Surdiyanto said.

Going back to the manual system would also apply to clearing and settlement activities of trading which are conducted by KPEI.

Surdiyanto also mentioned about steps to deal with the Y2K bug if it came from other institutions outside the capital market community.

He said if there was a problem in the telephone lines the stock exchanges had set up extra standby lines as a backup.

"Or else we would use a courier as a worst case scenario," he said.

Jakarta Stock Exchange had prepared six diesel-fueled generator sets in anticipation of electricity failure, he said.

Minister of Communications Agum Gumelar, who is also serving as the chairman of the Y2K national committee, said just about all important business sectors in Indonesia had announced their Y2K compliance.

"For example state-owned PLN and the country's capital market have announced that they are respectively 100 percent and 96 percent Y2K compliant," he said.

Agum said it was a blessing in disguise that there were many institutions in a wide range of sectors in Indonesia that were not fully computerized, thus, they would not be affected by possible problems.

"Every government office is manually operated except for the Ministry of Finance, the National Statistics Bureau, National Meteorology and the Institute of State Personnel Administration (BAKN)," he said.

He said only 6 percent of 4,000 power producers in the country could be affected by the Y2K bug, while the remaining 94 percent operate under a manual system.

"Almost all of the country's power producers are still using an analog-based system," he said.

Agum is the chairman of the national committee for Y2K, whose tasks are to oversee the country's preparation in anticipating the coming Y2K bug on Jan. 1, 2000.

The main focus of the national Y2K committee, which was established in 1998, is on finance and banking, health, transportation, electricity, energy and government sectors. (udi)