JSX gets new chief

JSX gets new chief

The Jakarta Stock Exchange (JSX) shareholders meeting which
elected new boards of directors and commissioners (supervisors)
on Monday is seen by many analysts as reflecting the stronger
influence and intervention of the Capital Market Supervisory
Agency (Bapepam) in the private company which owns and operates
the JSX.

The previous management, headed by Hasan Zein Mahmud, was
replaced two years ahead of the expiry of its term not because
that team performed poorly, but because the election was required
by a Bapepam ruling. It was, thus, not called for by the JSX
shareholders as is normally done in a limited liability company.

The Bapepam ruling, issued in January along with more than 85
other regulations to implement the new capital market law, sets
out new requirements for the JSX directors and new procedures for
their election. Outstanding among the new procedures are the
stipulations that candidates for the board of directors and
commissioners have to be approved by Bapepam and that they must
be nominated in a team and not as individuals to ensure a good
working mechanism.

Obviously it is too early to fairly assess whether the
management and supervisory teams elected under the new procedures
will perform better than the previous ones. We feel comfortable,
though, that the management team and supervisory board which were
elected are comprised mostly of competent professionals who are
well apprised of the developments at JSX.

Cyrill Noerhadi, the new president director, has been involved
directly in the stock market development in his capacity as the
president of the Securities Clearing Depository. Two other
directors -- Felia Salim and Mas Achmad Daniri -- were members of
the previous management board under Hasan. The other one, Edwin
Stambul, is a director of a securities company.

Still more encouraging was the election of Tax Director
General Fuad Bawazier as the chief supervisor. Fuad was the
expert in charge of capital market development on the finance
minister's staff in 1991 and 1992. As the tax director general
since 1993, he has also directly monitored the developments on
the JSX. The stock exchange needs a supervisor of his official
caliber in dealing with Bapepam.

Despite the positive results, Bapepam's ruling to require JSX
to hold another election for its board of directors within one
year is still raising questions relating to the manner and
rationale with which Bapepam may further exercise the stronger
power now vested in it by the new capital market law.

The majority of analysts, most notably the foreign ones, were
deeply impressed with the integrity and technical competence of
Hasan's management team. And although nobody seems to doubt the
competence of Cyrill's team, this group has yet to prove its
integrity, which is a very crucial requirement for the management
of the JSX, whose capitalization has now reached Rp 177.5
trillion (US$76 billion).

However, the new management will not likely be able to build
up a high degree of integrity and autonomy, if Bapepam does not
limit its intervention to the fundamentals needed to stimulate
sound market growth and to protecting the interests of the
investing public.