New exchange awaits decree

JAKARTA (JP): The operation of the country's commodities futures exchange now awaits a presidential decree, expected to be issued by the end of this year, a senior official said Tuesday.

The chairman of the Indonesian Commodity Exchange Board (Bapebti), Arifin Lumban Gaol, said that Bapebti had completed draft operating regulations for the exchange.

"What we're waiting for now is a presidential decree and it is expected to be issued by the end of this year," he told journalists at the sidelines of a seminar on commodities exchange here.

The exchange was slated to start operation between March and July next year, he said.

The creation of the commodities exchange is mandated by the 1997 Futures Exchange Law.

Bapebti, which currently operates a conventional commodities exchange, will likely act as the futures exchange supervisory board when the exchange is in full operation next year.

The supervisory board would be under the Ministry of Industry and Trade.

Daily operation of the exchange would be operated by a private exchange management and commodities clearing houses, under which commodities traders and brokers would work.

Arifin said the main commodities to be traded on the exchange would be coffee and palm oil.

Other commodities such as rubber, pepper, cocoa, shrimp, soybeans, cotton, cloves and plywood could also be traded there.

He said plywood was included in the list because its trading was no longer monopolized by a single business group in the country.

Arifin said that total transaction value should reach more than US$200 million per annum to allow transparent and fair trading practices in the market.

"If the transaction value is less than that, certain investors could dictate prices," he said.

Hanafi Sofyan, president of commodities futures brokerage firm PT Indofutop, said around 40 brokerage firms were ready to operate in the exchange next year.

All those brokerage firms had met the required net adjusted working capital of at least Rp 10 billion each, he said.

"We have no problems in terms of meeting the capital requirement. But we might also need fresh capital from foreign partners," he said.

He said the management of the exchange would also need assistance from developed exchanges abroad in terms of marketing, information technology and exchange management.

Arifin noted that the United States Agency for International Development, the Asian Development Bank, the World Bank and Australian Aid had provided assistance for the development of the local commodities futures exchange. (aly)