IDX confident of reaching IPO target

The Jakarta Post , Jakarta | Sat, 07/19/2008 11:02 AM | Business

The Indonesia stock exchange (IDX) is confident that at least 30 companies will go public this year despite market uncertainty caused by the U.S.-led sub-prime crisis and soaring oil prices.

Although 16 firms have so far been listed this year, some companies have delayed their initial public offerings (IPO) in the hope that better financial conditions will arrive.

Erry Firmansyah, the chairman of the IDX, said they believed 14 more companies would be listed by the year's end.

"We already have six firms applying and we're waiting for them to submit necessary documents. We will persuade big companies to join," Erry said.

He said the IDX had to inject a fresh supply of equity to brighten up sentiment amid a challenging market condition. As of Friday, the IDX composite index had fallen 24.3 percent from its peak on Jan 9.

However, Erry was less optimistic on the much anticipated IPOs by state enterprises PT Krakatau Steel and construction company PT Waskita Karya.

"They have not sent applications to the Indonesian Stock Exchange," he said.

There are a total of 395 firms listed on the exchange. Daily trade on the IDX averages Rp 5.5 trillion, with the majority of trades involving equity and government bonds.

Transactions of government bonds called SUNs account for Rp 3 trillion of that total, while ORI bonds account for Rp 6 million, and corporate bonds Rp 63 billion. Equity transactions make up the remainder.

IDX director M.S. Sembiring said there were currently around 1.5 million local investors, and that the number was expected to grow to two million by the end of the year.

"This is much lower than our potential of 34 million middle-upper residents."

The majority of investors are from Jakarta, he said, adding that the educational programs were needed to raise public awareness of the IDX.

The exchange opened its ninth index information center (PIPM) in Padang, West Sumatra, on Thursday. The center hosts stock brokers, who allow for easier access to information on the market.

The next two will be opened in Yogyakarya and Cirebon.

The PIPMs are also aimed at educating local investors. So far, the IDX has built two training centers in Jakarta and Surabaya, East Java, where short courses are held.

The company also plans to establish a school for higher education on the capital market in cooperation with the Capital Market Regulatory and the Finance Agency.

"It is for long-term supply. We lack quality capital market professionals now to expand our activities. The security companies also face tight competition to keep their workers from headhunters," Erry said.

He said he hoped to start holding the three to six month-long course before next year and to offer a full undergraduate degree within two years.

The curriculum is still being prepared, as is a possible cooperation with a local university. He said there were also plans to eventually form cooperations with universities in the United States and Australia.

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