Govt to ride booming stock market

The Jakarta Post ,  Jakarta   |  Wed, 05/30/2007 8:42 AM  |  Business

Ary Hermawan and Urip Hudiono, The Jakarta Post, Jakarta

The government will provide tax incentives to companies wishing to go public so as to provide more protection for investors and encourage Indonesia's recently booming capital markets in supporting growth in the real sector.

Finance Minister Sri Mulyani Indrawati said she would soon issue a ministerial regulation providing tax breaks for companies wishing to list on the Jakarta Stock Exchange (JSX) in the second semester of this year.

""We hope to finalize the draft regulation within the next one or two months,"" she told an investor forum Tuesday.

She added that details of the proposed fiscal incentives were currently being discussed by the Finance Ministry's Directorate General of Taxation and the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK).

Tax service director Darmin Nasution said the service was still considering the minimum amount of shares that companies would have to offer to the public to benefit from the fiscal incentives, while saying it would likely be 15 percent.

""We realize the policy may reduce revenues, but we want more companies to sell stakes on the market,"" Sri Mulyani said.

Trade Minister Mari Elka Pangestu had also said that the government would issue new capital market regulations containing anti-money laundering measures, and setting out the fees for listing companies, in order to encourage more investors to buy shares.

The government expects that between 15 and 20 state and private companies will hold initial public offerings this year.

State Minister for State Enterprises Sofyan Djalil said that among the state firms that would sell stakes this year were Bank Negara Indonesia (BNI), tollway operator Jasa Marga, and construction firms Wijaya Karya and Adhi Karya. Another 10 state firms are being prepared to go public ""when the market momentum is right,"" he said.

There are at present 343 companies listed on the JSX.

Indonesia's capital markets have recently been boosted by inflows of global investor funds, achieving a capitalization of Rp 1,400 trillion (US$155 billion) this second quarter, up from Rp 1,250 trillion at the end of last year, Finance Minister Sri Mulyani said.

Daily average turnover on the JSX has now reached Rp 3 trillion, up from Rp 1.8 trillion at the end of 2006.

Meanwhile, Bapepam-LK director A. Fuad Rahmany said the government would also continue to improve market regulations -- particularly as regards enforcing the transparency of information among listed firms -- to protect the interest of investors.

In his keynote address to the three-day annual event, Vice President Jusuf Kalla asserted that the government was committed to market-friendly policies and providing a stable environment for investors.

Yet this would only be sustainable if the capital markets synchronized their activities with the real sector.

""We have to define first what the role of the capital market is: it should be to drive the economy. The capital market is, of course, a place to speculate, but it should also be a place for corporations to raise funds for expanding their businesses.

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