Keep investor confidence: Soeharto

JAKARTA (JP): President Soeharto called on financial authorities yesterday to maintain and enhance investor confidence to avoid capital flight.

"Once investors lose confidence in our capital market, they will quickly and easily move their funds to other countries," Soeharto said at the opening of a two-day international conference on the Indonesian capital market.

This would mean losing the capital the country needed to finance its development, he said at the two-day conference, held to commemorate the Capital Market Supervisory Agency (Bapepam)'s 20th anniversary.

Soeharto also called for the need to improve the country's capital market performance not only to attract investors but also to encourage more companies to use it as an alternative to finance their businesses.

Listed companies and other capital market players should promote transparency because only with business transparency would they be able to maintain public confidence, the President said.

Indonesian rupiah and share prices have been under pressure for several weeks following the devaluation of the Thai baht and Philippine peso early last month.

The rupiah dropped to a new low of 2,760 against the U.S. dollar yesterday after Bank Indonesia, the central bank, abandoned its intervention bands.

Share prices on the Jakarta Stock Exchange (JSX) Composite Index lost 2.4 percent to 643.01.

In his speech at yesterday's conference, Finance Minister Mar'ie Muhammad, said the country's capital market needed improving despite its rapid expansion.

Mar'ie said the capital market required the participation of all those who had the ability to anticipate international market trends.

Economic liberalization and the more integrated global capital market had increased competition and interdependency, resulting in a greater flow of capital from one country to another, he said.

"The Indonesian capital market must be able to seize this opportunity to increase trading volume, market capitalization and liquidity," he said.

Soeharto said the capital market played a pivotal role in raising funds for the country's development program.

He said he expected 77 percent of the Rp 815 trillion (US$315 billion) in investment funds needed for the sixth five year development plan, ending in 1999, would come from the public.

"It is through the capital market that we expect to reach the investment target," he said.

Also speaking at the conference was Capital Market Society chairwoman Siti Hediati Prabowo -- one of the President's three daughters.

Siti Hediati, who owns at least two securities companies, said she was confident the Indonesian capital market could become the largest in the Southeast Asian region by the year 2020, given its rapid development.

Since the country's capital market was reactivated in 1977, 325 companies have listed their shares on the local exchanges, compared to 27 companies 10 years ago.

At yesterday's conference noted businessman Bob Hasan, chairman of the Astra Group, spoke about the Indonesian economic success and its prospects and challenges.

Bob Hasan, known as the country's timber mogul, said the timber industry provided an excellent case study of how Indonesia had changed from a modest agricultural society to a prosperous industrializing country.

"Indonesia's timber industry has evolved from cutting and selling logs 25 years ago, to becoming the world's largest exporter of hardwood plywood," he said.

The conference was attended by about 1,200 people, almost half of whom were international fund managers and will also feature a market exhibition and investor forum. (das)