T

he Financial Services Authority (OJK) is reviving its push for state-owned enterprises (SOEs) and their subsidiaries to go public so that they could expand more as they benefit from broader funding sources.

'€œThe stock market can play a good role in SOEs'€™ growth,'€ said Nurhaida, OJK commissioner for capital market supervision, during an OJK seminar in Jakarta on Tuesday on the subject of urging SOEs to go public.

By going public, she explained, more funding opportunities, including long-term loans, will open up for state firms, which can be used for business expansion. '€œThe funds obtained from going public in the capital market can also be used to help the company'€™s growth and expansion,'€ Nurhaida added.

Nurhaida said that the OJK and the government are currently trying to elevate the role of SOEs and their subsidiaries to stoke growth in the country'€™s economy, which has slowed to rates unseen since 2009.

'€œThe global economic situation is fluctuating and it is affecting our economy as well. To improve our situation, we want to heighten the role of SOEs in the stock market and will eventually ease regulations for them to do so,'€ she added.

Indonesia needs more domestic investors as they only account for 36 percent of overall investors in the local stock market, according to Nurhaida. The majority of funds invested in local stocks (64 percent) was provided by foreigners.

By having more state firms listed on the Indonesia Stock Exchange (IDX), Nurhaida expects more local investors to be interested in investing. That is expected to, in turn, make the domestic stock market less dependent on foreign investors who are primarily affected by external factors.

Other advantages that an SOE can take from going public include improving the company'€™s transparency and public image, because listed firms are entitled to announce their financial performance and corporate action plans to their public shareholders.

Only 33 SOEs have gone public, with 22 of them having listed in the IDX. The listed companies are in several varied sectors, such as banking, property, telecommunications, mining and transportation.

Nurhaida added that the total capitalization of SOE shares in the IDX has accumulated to the amount of
Rp 423.3 trillion. '€œThis figure shows the large potential of funding that can be obtained by the SOE through the capital market,'€ she said.

Elevating the role of SOEs in the Indonesian economy is included within the OJK'€™s master plan for 2015 to 2019, which includes heightening efforts for SOEs to benefit more by issuing shares or bonds, whether they be sukuk or conventional, in order to improve the competitiveness and liquidity of the Indonesian capital market.