T

he country'€™s capital market needs new domestic investors that could serve as a buffer against global economic volatility, according to officials from the Financial Services Authority (OJK) and the Indonesia Stock Exchange (IDX).

OJK commissioner Nurhaida said the country needed to generate new investors in 2014 in order to improve its capital market penetration as a buffer against uncertainty in the global economy.

'€œShould the global economy face a downturn, we would be less affected by foreign capital outflow because we would have a solid domestic foothold,'€ she said in her remarks during the opening ceremony of the 2013 Investor Summit and Capital Market Expo on Wednesday.

The summit and expo, which will run until Thursday, is part of the effort to boost domestic investment, according to Nurhaida.

'€œAt the same time, we expect the forum to increase the number of listed companies and market capitalization,'€ she added.

It is the sixth event held by the IDX and the capital market regulator. This year'€™s event features 28 listed companies, ranging from banks to mining companies, and about 2,500 people are estimated to visit the two-day forum.

Latest statistics from the regulator show that at the moment less than 0.2 percent of the country'€™s total population is currently registered as investors in the capital market, while data from the Central Securities Depository (KSEI) reveal that as of Nov. 25, the amount of investors reached only 405,000.

'€œThis is much lower than the figure reported in neighboring countries, such as in Malaysia and Singapore,'€ Nurhaida said, adding that in the two countries, the figure stood at 20 percent and 30 percent of the population, respectively.

In terms of listed companies, the IDX has 482 firms at the moment, with total market capitalization standing at Rp 4.19 quadrillion (US$355.12 billion).

Indonesia'€™s stock market capitalization to GDP ratio is also lower compared to Malaysia, the Philippines and Thailand.

While Indonesia'€™s ratio ranges between 40 percent to 50 percent, Malaysia'€™s exceeds 160 percent and the figure is higher than 100 percent in both the Philippines and Thailand.

IDX president director Ito Warsito said that the IDX was optimistic the forum would generate new potential investors. He acknowledged that growth had been slow so far despite the growing number from the middle class.

'€œFrom June 2009 and November 2013, the number of investors rose more than double. However, based on the financial literacy index, it turns out that only one person out of 100 is active in the stock market,'€ he said.

OJK chairman Muliaman D. Hadad, meanwhile, said that the authority hoped to see the amount of investors rise to 1 million in 2014, as visitors of the forum gained deeper knowledge on the capital market during the event. (tam)