While the world was watching Obama's victory last week, IDX-Bapepam, supported by the Finance Ministry, won an epic battle in the Bakrie trading suspension episode.

The epic battle began on the morning of Nov. 5, 2008, when the Indonesia Stock Exchange (IDX) under the supervision of Bapepam and the Finance Ministry decided to lift a trading suspension on Bumi Resources (controlled by the family of Coordinating Minister for the People's Welfare Aburizal Bakrie). The announcement was circulated to all market participants.

However, minutes before trading started, the IDX decided to cancel its earlier decision "after a request from the government". Finally, the suspension was lifted again and the stocks fell sharply to the extent they triggered an automatic suspension. Was this the victory of independence/integrity over political expediency?

The whole episode raised a lot of questions among market participants, with the biggest question being who within the government had enough power to overrule the capital market regulator and the Finance Minister. The Bakrie share trading episode demonstrates with exceptional clarity the difficulties, pressures and dilemmas facing IDX-Bapepam and Finance Minister Sri Mulyani Indrawati. It demonstrates the high degree of unselfishness and risk-taking they require in doing their duty to protect market integrity and serve the investing public well and faithfully.

This dilemma is an epic battle of Capital Market Integrity and Independence versus Financially Sophisticated, Politically Connected, Strong Will for Survival -- the latter of one of the most powerful business groups in Indonesia which has strong support from major market players with vested interests, who have been caught in an inopportune moment in a bear market.

It is interesting to ask which function of the government requested the reversal of the suspension because the government can wear different hats that might have contradictory objectives. The government through IDX-Bapepam, supervised by the Finance Ministry, wears the hat of regulator.

Meanwhile, the government through the State Ministry for State Enterprises wears a market player hat. The government through the president/vice president plays a role as ruler. So which function of the government has the power to overrule the suspension: The Regulator, The Market Player or The Ruler?

Common sense rules out the Regulator -- as the whole market understands that the IDX and Bapepam in consultation with the Finance Ministry had decided earlier to lift the suspension.

To simplify this, the writer draws an analogy with a basketball game. When the Home Team is facing the Away Team, the game is suspended by the umpire because of a sudden emergency situation. At this point, the Home Team is losing badly and the whole stadium has bet its money big time that the Home Team will win.

When the game has been suspended too long, the umpire must decide whether to continue the game or continue with the suspension. The Home Team, supported by the whole crowd, is lobbying the umpire to continue to suspend the game indefinitely, while the Away Team, which is a minority, is demanding its right to continue the game.

In the name of integrity, independence and justice, the umpire has decided to continue the game. Suddenly the Ruler -- the owner of the franchise of the game -- intervenes and asks that the game be suspended again. As a spectator, consider: Do you still love this game? Do you think the franchise owner has the right to intervene in the umpire's decision, even though the franchise owner is the de facto boss of the umpire? In the basketball game analogy, the umpire has the highest degree of authority during the game -- not the franchise owner.

Bapepam has the highest authority in the capital market issue. Its supervisory power is stipulated clearly by the Capital Market Law -- so not even "an office higher than the Finance Minister" has the power to intervene. But many will be pointing out that political expediency/connection is mightier than the rule of the game.

In this entire share debacle, the missing point is the lack of the clarity about what is a realistic time to be granted to the market player. This realistic timeframe should be defined and communicated to all market participants in advance so they can make an informed investment decision.

If indeed the intervention comes from an office higher than the Finance Ministry, we can imagine the pressure and the dilemma facing IDX-Bapepam and Minister Sri Mulyani. These fine regulators must stand by their duty with absolute disregard of their career or job consequences in defense of the capital market's integrity and honor.

In this time of crisis, the biggest enemy is fear and a crisis of confidence. The confidence of the market in the government as regulator is strong -- I can't say the same of the other role of the government. Government is not a monolithic institution. The Bakrie share trading suspension saga demonstrates that crisis sometimes brings out the best of human character and it is really refreshing to learn that Indonesia possesses such individuals.

No regulator can suffer too much, no job is too sacred, if the regulators suffer pressure, being sidelined or even dismissed while defending the principle and honor entrusted to them by the people. Even though the share price might continue its downward trend because of the decision to lift the suspension, IDX-Bapepam and the Finance Ministry have shown real courage and grace under fire in their finest hour as regulators.

The writer is a founder of Independent Research & Advisory Indonesia. He can be reached at Lin_chewei@pacific.net.sg

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