OTC to ease listing terms to attract small-scale firms
JAKARTA (JP): PT Bursa Paralel Indonesia, the country's over- the-counter stock market, will ease its listing requirements to attract small-scale companies, says the market's new president, Tito Sulistio.
Tito told a three-day international conference on capital market activities here yesterday that small- and medium-scale companies will be the main targets in the future.
"There are thousands of small- and medium-scale companies hungry for investment funds here. That's why I am very optimistic," he said
Tito, the former chairman of the Jakarta Brokers Club and a member of the supervisory board of the Jakarta Stock Exchange, said that the OTC market also is aimed at companies already listed on both the Jakarta and Surabaya stock exchanges.
"The operation of the OTC is different from the other two stock markets and I believe share trading on the OTC will be more attractive," said Tito, who quit the club and the JSX in addition to leaving his job as the president of PT Pentasena Securities before assuming his new position.
The OTC market was established in 1987 but its trading activities remain dormant. The number of listed companies totals only 18 at present, comprising 13 bond issuers and five share issuers. Its trading volume is also very small, totaling only 4.17 million shares worth Rp 10.2 billion (US$4.85 million) in all of 1993, as compared to 3.84 billion shares worth Rp 19.03 trillion on the Jakarta Stock Exchange (JSX) in the same period.
Preparations
Tito said that a number of measures are now being prepared to revitalize the market's operation, such as upgrading trading facilities and personnel.
Panelists at the conference, sponsored by the JSX and the PACAP Research Center of the University of Rhode Island, however, were pessimistic over the future of the OTC market, given its inadequate trading facilities.
Khairil A. Abdullah, of the Securities Commission of Malaysia, said that competition with the country's two exchanges is unavoidable.
"The OTC will likely face difficulties in competing with the two markets, which are relatively stronger in the fields of both trading facilities and manpower," he told the meeting, which ended yesterday.
David Linnan and Cordon G. Dash, of the University of Rhode Island, were of the same opinion that the trading networks should first be improved to make the OTC attractive for both investors and share issuers.
Participants were also pessimistic that Tito would be able to turn his dream into a reality if no major breakthrough occurred in both trading facilities and the legal framework.
They agreed that the OTC will bring much help to small- and medium-scale companies, but that their lack of business professionalism and the high expenses to be made during public offerings could hamper them from floating their shares on the market.
Companies should, at the very least, hire professional accountants, legal consultants and a number of other supporting agencies to help them "go public." Each company will also be required to publish a prospectus for the public.
"Small and medium companies cannot afford to meet such requirements if no special treatment is given to them," an executive of a foreign securities firm said. (hen)