Plans for commodities futures exchange continue

JAKARTA (JP): The government is going ahead with its plan to establish a commodities futures exchange next year despite the deepening economic crisis.

Arifin Lumban Gaol, the chairman of the Indonesian Commodities Exchange Agency (Bapebti), said the government was currently preparing a legal infrastructure for the exchange.

"The futures trading is expected to be realized before 2000. The deliberation (of its legal structure) is currently in process at the state secretariat," Arifin said.

Arifin said the planned commodities exchange would be managed by a private entity and operate under the 1997 futures exchange law.

"Everything will depend on the private sector, which wants to run the futures trading exchange. The government would only supervise it," he was quoted by Antara as saying.

Bapebti, which at present operates a conventional commodities exchange, is likely to act as the futures exchange supervisory board when the exchange is fully operational.

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

Daily trading will be operated by exchange management and commodities clearing houses PT Kliring and PT Jaminan Bursa Komoditi, and commodities traders and brokers will work under the two institutions with commodity buyers.

Arifin had said that trading activities in the planned commodities futures exchange would be open to all commodities.

He said four Indonesian commodities had the potential to be traded on the futures exchange: coffee, crude palm oil, rubber and cocoa.

The government has planned to establish a futures exchange for some time but postponed it several times due to its controversy.

Arifin said it was high time Indonesia had its own commodities futures market to improve economic efficiency and competitiveness amid free trade.

He said futures trading was a worldwide trend in finance and trade which Indonesia should not avoid if it wanted to stay open to globalization.

He said Indonesia should not worry too much about the risks involved in futures trading because strict law enforcement and control of the market could prevent such harmful practices.

Commodities futures contracts are used as marketing tools for producers and investors to anticipate losses caused by price fluctuations. (gis)