Local financial market needs global integration

JAKARTA (JP): Coordinating Minister for Economy and Finance Saleh Afiff said that financial managers should be responsible for the integration of the domestic financial market into the world economies as a way of improving its own economy.

"A thriving financial market, closely integrated into the world's financial markets, is a key to the success of the country's economy," Afiff told the fourth congress of the Indonesia Financial Executives Association (IFEA) here Wednesday.

According to Afiff, initiatives to integrate the country's financial market into the global economies should not come solely from the government as it has already provided various deregulatory measures which will make the market integration possible.

He told the two-day meeting which ended yesterday that the market integration will attract more foreign portfolio investments as well as direct foreign investments.

"Exposure of our financial sector to competition from international institutions is improving the efficiency of financial institutions' operations which is crucial to the long- term growth of the economy," he added.

Afiff reiterated that the private sector is expected to mobilize funds worth about three quarters of total investments needed during the sixth Five Year Development Plan (Repelita VI) period, which began in April.

Afiff said a series of deregulatory measures introduced by the government since 1983 have encouraged private companies, both domestic and foreign, to increase investments in the country.

The number of firms listed on the capital market, for example, had steadily increased to some 200 with capitalization of over Rp 98 trillion (US$41.21 billion) as of Oct. 10 from less than 30 with capitalization of only Rp 500 billion as of 1988.

"At present nearly 30 percent of the equity on the stock exchanges is held by foreigners," he said.

He said that the country's capital market is now finding its way into international stock exchange integration.(fhp)