A

fter a long deliberation process, the House of Representatives on Tuesday finally passed the government-sponsored bills that will lead to the revision of the 2006 law on warehouse receipt and the 1997 law on commodity futures trading.

The two bills were approved by legislators during a plenary session, which was also attended by Trade Minister Mari Elka Pangestu and Law and Human Rights Minister Patrialis Akbar.

The two bills were passed by House Commission VI overseeing trade, industry and investment after several months of deliberations with the government.

The 2011 law on the revision of the 1997 Commodity Futures Trading Law includes new clauses on sharia derivatives and clearing houses. The new law also offers more stringent criminal sanctions.

“We have broadened the definition of commodity futures trading — now called futures trading — as everything related to the commodities trade involving margin settings and future settlements, is based on futures contracts, sharia derivative contracts and/or other derivative contracts,” Commission VI head, Airlangga Hartaro, said shortly before the unanimous endorsement of the law.

“The government and the House of Representatives took the longest time deliberating the regulation on business licenses for clearing houses, concerning their number and different forms,” he added.

Trade Minister Mari told the plenary session that the new futures trading law would help Indonesia comply with the aims of the G20 economic group, which is seeking firmer regulations on futures trading.

“We believe that the bill, when passed into law, will be a legal instrument allowing more effective supervision over derivative contract transactions, which are now being regulated,” Mari said.

“With the signing of this law, we hope that our future trading will develop and we’ll no longer have to refer to other countries to set the prices of our primary commodities,” she added.

Commission VI deputy head, Aria Bima, said the 2011 law on warehouse receipts will provide farmers with a stronger bargaining position and make them “price makers” instead of “price takers”.

“The [new law on] warehouse receipts gives farmers flexibility and a stronger bargaining position because they will no longer have to sell their commodities during harvest time only in order to secure funds for the next planting season,” Aria said.

“Now [farmers] can also pawn their warehouse receipts to banks, and sell them only when the prices of commodities are good. The warehouse receipts can serve as collateral for banks,” he added.

Aria said the new warehouse receipt law also ruled on the establishment of a warehouse receipt guarantee institution, which would provide indemnity funds to guarantee the rights of warehouse receipt holders.

“The establishment of the institution is expected to make banks more confident to channel funds to the agricultural sector using warehouse receipts as collateral,” added the Indonesian Democratic Party of Struggle (PDI-P) lawmaker.