Kalla urges capital market authorities to boost supervision
Rendi A. Witular and Urip Hudiono, The Jakarta Post, Jakarta
Improvements in law enforcement and legal certainty in the country's capital market are the keys to maintaining investors' trust.
If officials from the Capital Market Supervisory Agency (Bapepam) and other related authorities such as the Jakarta Stock Exchange (JSX) did not perform to meet public expectations, then investors' trust would decline, according to Vice President Jusuf Kalla.
"People buy hope when investing their money in the capital market, based on trust and values on the equities that they invest in. If this hope is tarnished then there will no longer be any trust," he said before capital market players on Wednesday.
His remark was delivered during the 2004 Annual Report Award ceremony -- jointly organized by the JSX, Bapepam, the Ministry of Finance and the Office of State Minister of State Enterprises.
Some analysts say that capital market authorities are generally tough on small firms and those without connections. On the other hand, they are lenient towards large and well-connected firms. This, they say, creates the impression that Bapepam officials colludes with larger companies.
This could clearly be seen when both the JSX and Bapepam dropped their plan last year to delist construction and engineering company PT Bukaka Teknik Utama, which is linked to the Kalla family, claiming that the company still complies with capital market regulations.
Both authorities decided to extend the company's listing to give some time for it to undergo restructuring, even though its shares have been suspended for more than two years following a "disclaimer" opinion given by the company's auditor Ernst & Young on its financial performance for five consecutive years.
During the ceremony, Kalla also emphasized the need for public accountants and capital market analysts to prevent corrupt practices by colluding with a troubled company to manipulate its financial report and get away with investors' money.
"Bapepam, public accountants and analysts should clearly uphold their professionalism. Don't collude with a company to mark up its financial report. You can escape untraced for two years, but not in the third year," he said.
If manipulation remained rampant in the capital market, Kalla said he feared it might eventually disrupt economic growth as investors would loose their trust in the market and the corporate sector.
"The ethics of a company are not merely to seek profit. They should look forward by focusing on the growth of its labor force, business, capacity and most importantly trust from its shareholders and partners," he said.
On the sidelines of the award ceremony, JSX president director Erry Firmanysah said as of July this year, 55 percent of trading activities on the bourse were still dominated by foreign investors and securities houses.
At present, the average value of trading activities in the JSX reached some Rp 2 trillion (US$204 million), with a total capitalization of about Rp 810 trillion.
Recipients of the 2004 Annual Report Awards
Grand award category:
Medco Energi International (oil and gas)
Publicly listed non-financial state-owned enterprise category:
Aneka Tambang (mining)
Adhi Karya (construction)
Indosat (telecommunications)
Publicly listed non-financial private firm category:
Medco Energi International (oil and gas)
Astra International (automotive)
Bakrie Sumatra Plantation (plantation)
Publicly listed financial state-owned enterprise category:
PT Bank Rakyat Indonesia (banking)
PT Bank Negara Indonesia (banking)
Bank Mandiri (banking)
Publicly listed private financial firm category:
Bank Niaga (banking)
Bank Bumiputera Indonesia (banking)
Bank Central Asia (banking)