Next JSX directors urged to uphold law

Rendi A. Witular, The Jakarta Post/Jakarta

Weak law enforcement and a lack of good corporate governance (GCG) are the main problems that must be addressed by the next management of the Jakarta Stock Exchange (JSX) to attract investors and encourage more firms to list their shares on the bourse, experts say.

Experts have called for immediate reform at the JSX as a self- regulating organization since the current management has failed to improve the image of the bourse as an institution that investors can trust.

"As a high-profile institution with many stakeholders, the JSX should lead efforts to enforce its regulations without discrimination to ensure the credibility of the capital market," Lily Widjaja, secretary-general of the Indonesian Association of Securities Firms, said in a telephone interview on Friday.

Lily, who is also an executive at Merrill Lynch Indonesia, emphasized the need for the next JSX management to apply the principles of good corporate governance in running the bourse to create transparency.

"The next management should lead efforts to create accountable, transparent and clean companies and an investment environment," she said.

Critics have said that the JSX, which should be at the forefront of policing capital markets, has often ignored capital market rules and taken the side of erring companies when dealing with controversial cases.

This has hampered the growth of the JSX. There are currently 100,000 investor accounts in the stock market, far from the target set 10 years ago of five million accounts.

Analyst Djoko Santoso Soenoe said local investors were reluctant to put their money in the equity market due to a lack of transparency and poor law enforcement.

"Investing in the stock market is more like gambling now. We cannot properly analyze a listed firm due to the lack of transparency within the firm. The situation is worsened by the JSX management's ignorance of the problem," he said.

The Capital Market Supervisory Agency (Bapepam) is vetting candidates for the new management of the JSX before shareholders of the bourse vote in an upcoming meeting on May 11.

The bourse's shareholders consist of all securities firms that are official members of the bourse.

There are three main candidates for the JSX top post -- the incumbent president director of the JSX, Erry Firmansyah, Surabaya Stock Exchange president director Hindarmojo Hinuri and securities analyst Adler Manurung, who is currently an executive at Nikko Securities.

According to Bapepam officials, Erry is likely to retain his post since the other two candidates are having trouble meeting the requirements for verification.

According to the requirements, the candidates must have the support of at least 10 securities firms that are members of the bourse, with the combined transaction volume of these supporting firms accounting for at least 10 percent of the JSX's total transactions.

There are currently 72 securities houses that are members of the JSX, and each firm gets only one vote in the election.

Erry has the support of 47 firms, Adler 16 firms and Hindarmojo 10 firms. However, two firms have voted for both Hindarmojo and Adler so their votes could be voided.

Officials at the JSX said if the firms refused to revise their votes, Hindarmojo would not have the necessary support to contest the election.