Sat, 13 Mar 1999

JSX delists 10 companies, including four closed banks

JAKARTA (JP): The Jakarta Stock Exchange (JSX) on Friday delisted ten companies, including four banks closed by the government last year, and warned 37 other corporations of a similar punishment unless they improved their businesses.

The delisted companies are PT Bank Surya, PT Bank Umum Nasional, PT Bank Dagang Nasional Indonesia, PT Bank Modern, PT Perdana Inti Investama, PT Great Golden Star, PT Dharmindo Adhiduta, PT Ometraco Corporation, PT Dharmala Agrifood and PT Intinusa Selareksa.

"The ten delisted companies suffer from liquidity problems and huge foreign exchange losses," JSX director Felia Salim said.

Although the companies have been delisted, legally they still are considered public companies, Felia said.

As such, they are required by transparency regulations to present their financial reports to the Capital Market Supervisory Agency and also to their shareholders.

The JSX said in a statement that the ten companies had not shown satisfactory improvement in their financial and business performances since being included on the JSX's monitoring list, along with 37 other companies. The statement did not say when the companies were put on the list.

Felia said the other 37 companies had shown improvement but would still face delisting if they did not further strengthen their ailing businesses.

According to existing stock market regulations, listed firms booking financial losses amounting to half or more of their paid- up capital at the end of the last calendar year or which suffer losses in three consecutive years will be delisted.

Last year, the JSX delisted several companies, including PT Perdana Inti Finance.

Economist Sri Mulyani Indarwati welcomed JSX's move to delist companies which performed poorly.

She said that allowing troubled companies to remain on the exchange would prevent investors from entering the local market.

"They (the delisted companies) were not liquid anymore and were not managed efficiently, including the closed banks. They should have been cleared from the exchange sometime ago because they had no meaning to investors."

She noted that the current dominance of finance and property firms on the JSX was not healthy. Such firms make up more than 60 percent of corporations listed on the exchange. The current debacle in the banking and property sectors, which has negatively impacted the exchange, has proven that having any one sector dominate the exchange is a recipe for disaster.

"The bourse, which should be an alternative source of financing for the business sector, suffers the most. This is ironic."

She suggested that JSX management be more prudent when selecting which companies it allows to raise public funds on the exchange.

"In the medium and long term, the JSX has to select stronger companies which can better weather any crisis. Such companies are agriculture and mining-based companies. These are the strongest firms but are the least represented on the JSX," Sri added. (gis/02)