Lack of incentives discourage firms from going public
Rendi A. Witular, The Jakarta Post, Jakarta
Lack of fiscal incentives and unfavorable capital market regulations have been blamed for the sluggish growth in the number of companies willing to sell their shares to the public by listing themselves on a stock market, an association says.
Such a situation makes it difficult for the local bourse to become a major source of financing, outside of banks and other investment tools, said chairman of the Indonesian Publicly Listed Companies Association (AEI), Airlangga Hartarto, on Thursday.
"The government is giving the same treatment to publicly listed firms as it is to those that are not listed. This discourages more firms from improving their corporate governance by going public," said Airlangga after meeting Vice President Jusuf Kalla.
Airlangga said Indonesia was lagging behind neighboring countries in luring more companies to the stock market, which to some extent, limits the participation of investors in the market.
The absence of incentives has led the Jakarta Stock Exchange (JSX) to lower its ambitious target for the registration of new listed companies this year from 30 to just 15.
From January to September, there were eight new companies listed on the JSX, with another seven expected to follow soon.
At present, there are 333 companies listed with the bourse.
There are also concerns that several of the existing listed companies will buy back their shares from the public and become private companies, in part because being a listed company means more costs.
In order to attract non-listed companies, AEI suggested the government provide fiscal incentives in the form of a tax clearance facility and an income tax break ranging from 5 percent to 10 percent.
In the tax administration sector, the association demanded the government allow public accountants to audit the taxes of publicly listed companies without having to go through another audit by the Directorate General of Taxation.
AEI also appealed to the vice president to drop plans to tax mutual fund proceeds, as included in the proposed amendment of the tax laws, which are currently being deliberated upon by the House of Representatives.
In the regulation sector, AEI urged the Capital Market Supervisory Agency (Bapepam) to reduce an effective approval for an initial public offering (IPO) and for other forms of capital- raising from 45 days currently to 30 days.
Airlangga said publicly listed companies should also receive easier processing when trying to acquire certain operational approvals or licenses, as well as a smooth procedure for export and import activities.
"With preferential treatment provided for publicly listed companies, we expect that their performance will be improved and they could pay more taxes to the state because these companies already have good corporate governance," said Airlangga.