New bourse law to make Bapepam more independent

New bourse law to make Bapepam more independent

JAKARTA (JP): Minister of Finance Mar'ie Muhammad said
yesterday that the new capital market law, when enacted, will
enable the Capital Market Supervisory Agency (Bapepam) to operate
more independently.

Under the new capital market law, the capital market watchdog
will directly handle almost all aspects of capital market
operations, he said at a plenary session of the House of
Representatives.

"The Ministry of Finance will then be responsible only in
issuing a general policy in directing capital market activities,"
he told the session, which marked the start of deliberations over
draft bills on capital markets, customs and excise.

The issuance of operational licenses of all agencies involved
in capital market activities and that of other operational
requirements will, therefore, be directly handled by Bapepam, he
said.

Bapepam has been widely criticized for being too dependent on
the Ministry of Finance in conducting its supervisory tasks and
for lacking the power to enforce laws.

Besides giving Bapepam more independence, the draft law on the
capital market also designates more judicial power such as the
ability to carry out on-site investigations and to issue
sanctions against those involved in insider trading and other
trading fraud.

At present, Bapepam has difficulty investigating share issuers
or other market-supporting agencies for fraud or manipulation due
to its inability to carry out on-site investigations.

The capital market law draft, which was formally submitted to
the House early last month, contains 16 chapters and 123
articles. It will replace the 1952 Capital Market Law, which is
not only considered as being too simple but also too weak to
cover the rapid developments in capital market activities. The
debate on the new market law is expected to last about three
months before being endorsed.

Automation

Another important aspect of the law is the introduction of a
legal base for trading automation.

Answering House members' questions about possible excesses in
supervising market-supporting professionals, the minister said
that such power is a precondition to secure the investing
public's interest.

House members said the authority given to Bapepam to operate
both as a trading supervisor and agency with judicial power is
too much.

They said that such a privilege could compel Bapepam overact
due to its stronger investigative and judicial privileges.

But Mar'ie defended the exclusive prerogative and said that
such power should be included in the new capital market law
because the agency wouldn't be able to guarantee fair trading
with out it.

He said that Bapepam should also be able to set an accounting
standard to ensure financial statements issued by publicly listed
companies aren't misleading or incorrect.

The information about listed companies should be objective so
the investing public will have a reliable source of information
in making their investment decisions, the minister said.

"The Securities and Exchange Commission of the United States,
for example, has the administrative power to set the professional
standards to all those involved in the capital market activities
such as a public accountant," he said.

In Indonesia, Bapepam has the same power but in the
formulation of the professional standards, the agency cooperates
with its respective professional associations such as the
Association of Indonesian Accountants, the minister said.(hen)