State firms not above the law, Mar'ie warns
State firms not above the law, Mar'ie warns
JAKARTA (JP): Minister of Finance Mar'ie Muhammad stressed
here yesterday that the management of state-owned companies on
the domestic stock exchanges are not exempt from the Indonesian
Capital Market Law.
"Directors and commissioners of publicly-owned companies,
whether or not they are state-owned, may be sued for damages
related to violations of the law," the minister said in his
speech at an Indonesian capital market forum.
Mar'ie said that being a majority shareholder, the government
still has indirect control over listed state-owned companies but
he added that such control would not eliminate the principles of
disclosure.
Partial listing would, therefore, still have a significant
impact on the efficiency of the management because being listed
on a capital market, state-owned companies must also disclose
material facts pertaining to their operations.
In the two-day capital market forum, organized by Euromoney,
the minister said that questionable policies would be slated in
the international financial press, and be reflected in the share
price. Therefore, management will be motivated to perform in the
interests of the shareholders.
The government began its privatization program in the 1980s
with a number of schemes: Build-Operate-and-Transfer, Build-and-
Own, Contract-Management, Joint-Operation and Direct-Placement,
as well as share flotation on stock exchanges.
He said that a number of state-owned companies are now being
prepared to go public both on local and foreign stock exchanges.
These include Bank Negara Indonesia (BNI), state-owned harbor
management firm PT Pelindo II, PT Krakatau Steel, toll road
operator PT Jasa Marga, PT Rajawali Nusantara Indonesia, PT
Garuda Indonesia, subsidiaries of state-owned electric company PT
PLN and plantation firm PT Perkebunan Nusantara.
The minister hoped that the public offerings of those eight
companies would be as successful as those by PT Indosat, PT
Telekomunikasi Indonesia (Telkom) and PT Tambang Timah.
Mar'ie said privatization through share offers on the capital
market is considered the best approach, because the fairest price
is obtained.
"That also leads to transparency and the democratization of
capital," he said in the forum, which will end today.
Speakers of yesterday's meeting included Chairman of the
Capital Market Supervisory Agency (Bapepam) I Putu Gede Ary Suta.
Major source
In his paper, Putu said that foreign investment is a major
source of funding for Indonesian capital markets as local
investors are still fairly thin on the ground.
He said that the low participation of local investors is
partly a result of the low financial capability of local
securities companies.
Direct investment in the securities industry by international
investment firms is therefore encouraged, to support domestic
stock trading activities, he added.
"By inviting international securities firms to help develop
the domestic market, we obtain vital funding and facilitate the
rapid transfer of capital market technology," he said.
Putu noted that with access to international investment
houses, young Indonesians working in the security industry will
have ample opportunity to acquire the specialized knowledge and
experience needed to run their owned securities companies.(hen)