No rise in foreign stake

No rise in foreign stake

JAKARTA (JP): The government is unlikely to raise the 49
percent limit for foreign investors' ownership of shares listed
on domestic stock exchanges.

Yusuf Anwar, the secretary general of the Ministry of Finance,
said here yesterday that raising the ownership ceiling as a favor
to foreign investors could destabilize the country's monetary
system.

"We are very much concerned about the inflows of short-term
capital through stock markets," Yusuf said about the government's
reasons in maintaining the policy.

Yusuf, speaking at the fourth congress of the Indonesia
Financial Executive Association (IFEA) at the Shangri-La Hotel
here, said that the capital inflows would be much more volatile
if the foreign investors were allowed to buy more than 49 percent
of listed stocks.

The threat of the short-term capital has also become the
concern of other countries like Japan, the United States, Hong
Kong and Taiwan, he argued.

"We may amend the foreign limit in the future," he said. "But
give us a longer period of time to study all its impacts on our
fledging capital market."

The widening of the foreign limit has been long awaited by
stock market players. The existing ruling on foreign investment
in listed shares is no longer consistent with regulations on
direct investments, which allow foreign investors to have an
equity holding of up to 100 percent in unlisted companies.

Yusuf said speculative trading on the capital market, which
involves short-term foreign investment, has thus far been
manageable.

"I hope the planned bill on the stock market will be able to
cover preventive efforts against speculative moves," he told
reporters after presenting his speech.(fhp/hen)