Resources sector should not be held to JSX trading rules

Resources sector should not be held to JSX trading rules

JAKARTA (JP): The rules for listing on the Jakarta Stock
Exchange should contain an exception for resources companies if
they are to be encouraged to list their shares on the capital
market, analysts said yesterday.

"Several major changes are needed, including an exemption to
listing rules for mining and exploration companies," PT Panin
Sekuritas's technical advisor, Tom Soulby, told a seminar on "The
Indonesian Capital Market and the Resource Sector".

"Resource sector shares on the JSX are now under-developed,"
Soulby said, without citing the current listing rules as the main
cause.

Currently, only three resources companies -- oil mining
company PT Medco Energi, nickel mining firm PT Inco and tin
mining corporation PT Tambang Timah -- have floated their shares
on the JSX.

Data from the JSX show that of the three companies, only
Tambang Timah has been performing well on the capital market,
while the prices of Inco and Medco shares have declined since
listing.

"Moreover, the two stocks are inactive," said JSX president
Cyril Noerhadi.

Soulby said that the resources sector in the Indonesian equity
market will represent a significant portion, more than 20
percent, of the JSX's total market capitalization by 2010.

Rules

JSX rules stipulate that any company to be listed must have
been in operation for at least three years, have booked profits
in the last two consecutive years, have a minimum authorized
capital of Rp 20 billion (US$8.5 million) and a minimum paid-up
capital of Rp 7.5 billion.

The rules imply that only established companies can be listed
on the exchange. However, resources companies generally need a
longer period of time to book profits than firms operating in
other sectors.

"How can resources companies make a profit if they're still in
the exploration stage," a PT Tambang Timah executive said.

Rob Hogart from KPMG of Australia suggested that the JSX allow
for a capital risk concept instead of profit risk for resources
companies.

Cyril said that start-up companies, including resources
companies, can list on the Surabaya Stock Exchange (SSX).

SSX rules even allow companies suffering from losses to list.

"It's actually a joint program whereby the SSX acts as a
bridging exchange for newly-established companies and small size
companies," Cyril said.

"But the SSX is not as good as the JSX. We don't see many
foreign players there," Soulby said to The Jakarta Post.

Chairman of the Capital Market Supervisory Agency I Putu Gede
Ary Suta, who opened the seminar, added: "There are no
restrictions on the current listing rules for resources stocks
although those stocks often involve greater risk than those
operating in industrial and commercial sectors."

"The listing rules are determined by a stock exchange's
members, not by the government," Putu contended.

Other speakers at the seminar sponsored by ANZ securities of
Australia, Panin Sekuritas and KPMG, were BHP's president Colin
Smith, Crish Bain from ANZ Securities and Director General of
Mines Kuntoro Mangkusubroto. (alo)