President vows to strengthen capital market

President vows to strengthen capital market

JAKARTA (JP): President Soeharto pledged here yesterday that
the government will further develop the country's capital market
into a more attractive and efficient financing alternative.

Speaking at the opening of a two-day international conference
on the capital market, the President said that revitalizing the
capital market is essential to supporting the country's growing
economic activities.

Indonesia needs fresh investment funds of at least Rp 660
trillion (US$315 billion) to maintain the projected economic
growth of 6.2 percent per annum during the sixth Five Year
Development Plan (Repelita VI) period, which began in April, the
President said.

"The operation of capital markets is, therefore, increasingly
important in meeting the country's economic target since 73
percent of the required investment funds should come from the
private sector," he told around 1,500 foreign and domestic
executives.

The conference, sponsored by the Capital Market Supervisory
Agency (Bapepam), the Jakarta Stock Exchange (JSX), the Jakarta
office of the U.S. Agency for International Development (USAID)
and the PACAP Research Center at the University of Rhode Island,
features noted world economists, including Merton H. Miller, the
1990 Nobel Laureate, Mitsuo Sato, the president of the Manila-
based Asian Development Bank, and Richard W. Roll, a professor of
insurance and finance at the University of California at Los
Angeles.

An exhibition featuring activities of capital-market
supporting agencies and listed companies is also being held in
conjunction with the conference.

Soeharto acknowledged that the country's capital market is
still infant as compared to capital markets in more developed
nations.

"We feel encouraged, however, that it has shown quite rapid
growth and the people are more aware about the importance of the
capital market for long-term investments," he said.

Soeharto said that the government will continue to develop the
capital market more rapidly in the future and to further
encourage private companies and state-owned firms to raise
investment funds through the capital market.

Finance Minister Mar'ie Muhammad said he was upbeat that the
country's capital market will become one of the largest, if not
the largest, capital market in Southeast Asia, considering the
strength of the country's economy.

New measures

Mar'ie said a number of measures have been set forth to
further develop the capital market, from securities trading
mechanisms to its legal infrastructure.

A new capital market law, soon to be submitted to the House of
Representatives (DPR), will hopefully be enforced early next year
to replace the outdated Capital Market Law of 1952, he said.

Mar'ie said significant advances have also been made in
securities trading activities, including the computerization of
share clearing and settlement activities as well as the
construction of a new stock market building.

Hasan Zein Mahmud, the JSX president, said trading automation
will be introduced as soon as the exchange occupies its new
building, which is now under construction on Jl. Sudirman in
South Jakarta.

"We expect to be able to also introduce a scripless trading
system early next year," he said, adding that the introduction of
the new system and the enforcement of the new capital market law
will mark a breakthrough in the country's capital market history.

Trading automation will be also introduced on two other stock
exchanges, the Surabaya Stock Exchange and the Over-the-Counter
market.

As many as 220 companies have so far tapped the capital market
potential to raise funds for their investment projects and,
according to Bapepam, funds raised by both share and bond issuers
already hit a spectacular figure of over Rp 25.59 trillion
(US$12.18 billion) as of May. Trading volume has also
significantly increased in the last three years.

The daily trading turnover on the JSX, for example, more than
doubled to over Rp 77.6 billion in 1993 from Rp 30 billion in
1990. Market capitalization soared by over 558 percent to Rp 69.3
trillion as of the end of 1993 from a mere Rp 12.4 trillion as of
the end of 1990. (hen) Holdings -- Page 10