T

he House of Representatives plans to set up an inquiry committee to investigate the alleged low valuation of state-run steel company Krakatau Steel shares during the company’s initial public offering (IPO).

Several members of the House’s Economic Constitution Caucus said in Jakarta on Monday that House Speaker Marzuki Alie had expressed the need to form an inter-commission committee to probe Krakatau’s IPO process during the House’s plenary session to mark the resumption of legislators’ activities following a one-month break earlier in the day.

“In response to the public’s concerns over the IPO of Krakatau Steel, the House speaker has agreed to form a committee consisting of inter-commission members, which will be chaired by one of the commission chairmen,” said Kamarudin Syam, who represents Golkar party at the House’s Commission XI on financial affairs.

The IPO process of the nation’s largest steel maker recently has raised controversy after analysts and economic observers accused Krakatau Steel of intentionally setting the share price at a low level in order to accommodate the interest of certain groups including foreign investors and well politically connected investors in the country.

Krakatau Steel had set an offering price range of between Rp 800 and Rp 1,150 per share. But the company later decided to sell the shares at Rp 8,500 each, far below its book value, despite a strong demand.

Sadar Subagyo, from Gerindra party at the House’s Commission XI, said that the establishment of the inquiry team would be needed because the controversy over the company’s IPO had become more widespread.

“I hope it can be formed before the end of the month. But it will first need approval from the Consultative Body,” he told reporters after a press briefing with the House’s Economic Constitution Caucus at Sari Kuring restaurant in Jakarta.

House speaker Marzuki Ali told The Jakarta Post that he would let Commission XI decide whether to form an inquiry committee, a working committee or just conduct hearing sessions because it had competence on the matter. “I did not want to intervene. It’s [Commission XI members’] call,” he told the Post in a telephone interview. The head of the House’s economic caucus, Arif Budimanta, also a member of Commission XI, said that the Supreme Audit Agency (BPK) would also be asked to carry out an investigative audit on the Krakatau IPO.

Speaking at a plenary session Monday, Marzuki urged the BPK to conduct an audit investigation on Krakatau’s IPO process.

Krakatau’s IPO underwriters include state-owned Mandiri Sekuritas, Danareksa Sekuritas and Bahana Securities.

On the same day, the Coordinating Economic Minister Hatta Rajasa had also expressed the need for the Krakatau shares allotment to be disclosed, because he said it was not a state secret. “Just disclose it. Why should it be classified? ... The public needs to know, because there is a law that regulates the people’s freedom of information,” Hatta said.

However, chairman of the capital market regulator Bapepam-LK Fuad Rahmany has previously said that investors have the right to anomyity. “It would scare off investors if they were to buy shares and then their names were disclosed,” Fuad said recently.

Krakatau shares gained nearly 50 percent during the company’s debut on the Indonesia stock exchange (IDX) on Nov. 11. Analysts have said that the price jump indicated the low valuation of the company’s share price during the IPO. (est)