JSX's new management team given high markes

JAKARTA (JP): The former president of the JSX yesterday welcomed the election of Director General of Taxes Fuad Bawazier as new chief commissioner of the Jakarta Stock Exchange (JSX), replacing Marzuki Usman.

"It is very positive because the exchange needs a communicator to link it with the government. And Fuad can do it," Hasan Zein Mahmud, told The Jakarta Post

"I think his expertise in taxation matters will enable Fuad to create a synergy with the management team," Hasan said, adding that fair treatment and taxation incentives are key to developing the stock market.

Hasan said that the tax on capital gains is set fairly at 0.1 percent of total transaction value, but added that "It would be very attractive if the government could reduce it."

The JSX, according to Hasan, paid more than Rp 100 billion (US$42 million) in capital gains taxes last year.

The taxation policy is considered unfair by some for the way mutual funds are taxed. A mutual fund has to pay a capital gains tax, while the fund's shareholders also pay income tax on their dividends.

"Tax exemptions for mutual funds is fair treatment and not an incentive," he said.

Hasan added that the new JSX new president, Cyrill Noerhadi, is qualified to take over his position.

"He has much experience with the stock market. Moreover, the JSX needs someone who can accelerate the implementation of scripless trading and Cyrill meets that qualification," he added.

He said the operation of scripless trading is urgent if trading activities are to be made more efficient.

"We already have about 46 billion shares listed on the JSX. This year the number of listed shares may reach 100 billion with the new listings by some state-owned companies. The most effective way to create efficient market activities is scripless trading," Hasan said.

The chairman of the Jakarta Brokers Club, Nurkhamid Akhmad, said that the newly-elected management is highly qualified.

"I believe they are professional people," he said.

Hasan said that the new management should be committed to bringing more domestic investors onto the market.

"They should give high priority to establishing remote trading terminals. Without providing easy access for the investing public, how can we expect the number of domestic investors to increase?" he asked.

He said that one of the main barriers to setting up remote trading is the unwillingness of securities companies to open branches in other cities, where it is nearly impossible for them to break even within the first two years.

He said that the success of PT Telkom in attracting domestic investors was because the company distributed its shares through banks in 15 Indonesian cities.

"Unfortunately, we don't have brokerage houses in all of those cities. That's why many investors had difficulty selling Telkom shares," Hasan said.

"It's very costly if an investor from Bandung comes to Jakarta just to sell 1,000 shares," he added.

Hasan also reminded local brokerages that the future of their business depends on their ability to get more domestic investors.

"I'm pretty sure that it's almost impossible for most local brokerages to compete with joint venture securities companies in gaining foreign clients," he said.

"I am afraid that joint-venture brokerages may get the head start in attracting local investors if domestic brokerages don't act now," he noted. (08)