Stronger stock exchange
The timing of the two-day Indonesian Capital Market conference, which ended yesterday, was very opportune in view of the jitters among investors caused by the July 27 rioting in Jakarta. Though the timing of the two-day meeting had nothing to do with the incident-- the conference had been planned for over three months to mark the 19th anniversary of the Indonesian capital market -- the gathering was very effective in putting the appropriate perspective on people's concerns about the country's political and economic stability.
The 900 businessmen, securities analysts, bankers, investors and officials who attended the meeting were treated to thorough and candid discussions on the prospects of the economy, the future development of the domestic capital market and the social, political and cultural setting in Indonesia. Further adding to the weighty nature of the meeting was the competence of the panelists and speakers. These included Finance Minister Mar'ie Muhammad, Bank Indonesia Governor Soedradjad Djiwandono, Vice Chairman of the National Resilience Institute Juwono Sudarsono, former Australian prime minister Robert (Bob) Hawke and many other domestic and foreign analysts.
The forum enabled the participants to get firsthand briefings from policy makers and seasoned Indonesian analysts about Indonesian policies now and the likely future trends. Comprehensive evaluations of the social, economic and political situations, such as those made during the conference, are obviously essential to any investment decision. Such frank discussion should make future policy directions more transparent and more predictable. This in turn will help investors calculate more accurately the risks of their deals.
Still more impressive was the appropriate, eloquent and frank manner in which Mar'ie and Sudradjad explained the prospects of and future challenges facing the economy. It was even more encouraging to note that the minister and the governor, who are responsible for fiscal and monetary management, share the same views about the fundamentals of the economic strategy. They rightly reaffirmed macroeconomic stability as the prerequisite for capital market development. Juwono was no less straightforward in his reading of the political map and the forthcoming succession of the national leadership. If the government is really serious about coping with what it often labels as biased foreign media reporting about Indonesia, the frequency of such well-organized meetings should be increased and more high-ranking officials should be willing to address such gatherings.
Sudradjad also listed the policy options he can choose from to manage portfolio capital flows through the money and capital markets in order to maintain monetary stability. His explanation should make his monetary management more transparent and this will help businessmen read the signals coming from the monetary authority.
Mar'ie who oversees the capital market through the Capital Market Supervisory Agency also conveyed the right message to help improve investor confidence in the market. Obviously, he did not make any forecast on share prices. That is neither his responsibility, nor his area of expertise. Instead, he briefed the investors on what he is doing and will do to make the market more transparent, more liquid, more efficient and more reliable in creating fair stock prices. All these are surely the fundamental prerequisites needed to secure healthy growth in the capital market.
The domestic stock exchange, as Mar'ie himself acknowledged, need continuous improvements as it is still relatively young. The most important thing, though, is that it is developing along the right lines.