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)