Stronger stock exchange

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.