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)