Indonesia Needs More Listed Companies Ahead of AEC in 2015, OJK Says

Indonesia Needs More Listed Companies Ahead of AEC in 2015, OJK Says

By Yohanes Sirait on 06:47 pm May 05, 2014

  1.  Indonesia needs to have more listed companies on the local bourse in anticipation of the advent of the Asean Economic Community at the end of 2015, according to Rahmat Waluyanto, the deputy chairman of Indonesia’s Financial Services Authority.

“Indonesia’s capital markets must be prepared, so that when the AEC is implemented, they will be ready to compete with other markets in other Asean countries,” Rahmat said in his keynote speech at a discussion in Jakarta on Monday on how Indonesia’s capital market would respond to the regional economic integration.

Under the AEC blueprint, capital market regulators from the bloc have agreed to interlink their markets by 2015, in a move that, should it proceed successfully, may account for 15 percent of the world’s market capitalization.

There are already three exchanges in Asean (Malaysia, Singapore and Thailand) that have been connected via a single trading platform — the Asean Linkage — giving investors access to the stocks of all the companies listed in those countries.

Indonesia, the Philippines and Vietnam are not linked yet.

Rahmat cited a number of challenges Indonesia faced to compete with its regional rivals.

He said there were only 489 listed companies on the local bourse, with a combined market capitalization of Rp 4,822 trillion ($475 billion), a number that falls far below those of neighboring countries that have smaller economies.

In Malaysia, there are already 906 listed companies, while in Singapore, there are 767 listed companies.

Rahmat said investors had actually been betting on the potential gain in Indonesia’s index, having seen strong upside for its benchmark stock index this year compared to regional rivals.

“For the year to date, the [benchmark] Jakarta Composite Index gained 13.21 percent, while in Malaysia the index gained only 0.11 percent, in Singapore it gained 2.69 percent and in Thailand 9.45 percent. Only the Philippines is performing better, with an increase of 14.48 percent,” he said.

Rahmat said his office, known as the OJK, was encouraging state-owned companies, private companies and small and medium enterprises to list their shares on the IDX.

Other than that, the OJK will also make efforts to boost the number of local investors.

According to data from the IDX, as of April 2014 there were only 427,498 retail investors active in the financial markets, representing less than 2 percent of the country’s population.

 

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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