[Kabar-indonesia] JP: More IPOs planned for SOEs this year [+Capital market]

[JoyoNews at aol.com]

also: JP: Judging from the figures of the capital market 

The Jakarta Post
Wednesday, August 2, 2006

More IPOs planned for SOEs this year 

Urip Hudiono, The Jakarta Post, Jakarta

While it is sometimes a politically sensitive issue, the government says it 
will continue privatizing selected state-owned enterprises (SOEs) to boost 
their performance and transparency.

Privatization could also help develop Indonesia's stock market, State 
Minister for State Enterprises Sugiharto said, especially if done through initial 
public offerings (IPOs) on state firms with large market value. 

Speaking Tuesday at the Indonesia Investor Forum 2006, Sugiharto said the 
issue would always inspire controversy because of the diverse and sometimes 
conflicting interests of stakeholders, including the government, employees, 
investors, and the public. 

Sugiharto said all the parties should find common ground in carrying out the 
changes carefully so that the results will benefit the companies. 

"I think this is what we all want: SOEs that are transparent, accountable, 
and financially healthy," he said. "And if the SOEs are performing better in 
their business, then they can pay more taxes and dividends to the government." 

Citing official data, Sugiharto said privatization programs had improved the 
operating efficiency and output of various SOEs over the past three years. 

The government has carried out a number of such programs since 1991, using 
IPOs, strategic sales, market placements, and internal buyouts. 

Data from the Jakarta Stock Exchange indicate nine publicly listed SOEs make 
up 36 percent of the bourse's market capitalization, at Rp 323 trillion (US$35 
billion). 

They include such blue-chips as Bank Rakyat Indonesia (BRI), 
telecommunications firm PT Telkom and gas utility PT PGN. 

Sugiharto said enterprises planning IPOs within the year included turnpike 
operator PT Jasa Marga and PT Indonesia Power, a subsidiary of state power 
utility PT PLN. The government has decided to postpone the IPO of home mortgage 
lender Bank Tabungan Negara (BTN), however, until next year. 

Jasa Marga president director Frans Satyaki Sunito has said the company will 
offer 20 percent of its stock in the fourth quarter, hoping to raise up to Rp 
2 trillion. 

The company manages 456 of the country's 590 kilometers of toll roads. It has 
Rp 9.7 trillion in assets and booked Rp 293 billion in net profits last year. 

Indonesia Power will sell 10 percent of its stock in September or October, 
said Abimanyu Suyoso, one of the company's senior executives. 

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The Jakarta Post
Wednesday, August 2, 2006

Judging from the figures of the capital market 

Hendarsyah Tarmizi, The Jakarta Post, Jakarta

The Capital Market Supervisory Agency (Bapepam), which will celebrate its 
29th anniversary Aug. 10, has made a host of promises and commitments as part of 
its annual resolutions.

During the opening of the First Indonesia Investor Forum, a two-day capital 
market conference held as part of events to commemorate the agency's 
anniversary at Hotel Mulia in Jakarta on Monday, Bapepam's newly appointed chairman, A. 
Fuad Rahmany, promised the agency would work harder to make the Indonesian 
capital market -- stock, bond and mutual fund trading -- a better place for 
investing. 

He also highlighted the agency's successes over the past five years and the 
challenges that lie ahead during the next decade. But for me, the data issued 
by the agency is much more interesting than what the agency's chairman said 
about his programs, not only because such statements have been repeated on 
numerous occasions, but also because they simply provide no concrete action plans. 

Although there are many problems in bond and mutual fund trading, I will 
focus on the performance of the stock exchange. 

Data related to the high growth of the Jakarta Stock Exchange's Composite 
Price Index (CPI) is, for example, quite encouraging. The Jakarta exchange is one 
of the best performing exchanges in the Asian region in terms of price index 
growth, one of the most important criteria for determining the size of gains 
that have been enjoyed by investors on their investments. 

The Jakarta exchange's Composite Price Index has recorded the largest growth 
compared to the main price indicators of other stock exchanges in the ASEAN 
community, and of more developed markets such as in Japan and South Korea during 
the last five years. 

Based on data provided by Bapepam, the JSX's CPI has surged by more than 235 
percent during the past five years. This has easily outpaced growth at other 
stock exchanges, including the Thailand Stock Exchange, the Singapore Stock 
Exchange and the Malaysian Stock Exchange, whose composite price indices gained 
only 50 percent, 44 percent and 40 percent, respectively, during this same 
five-year period. 

These numbers show that the gains received by investors in Indonesian shares 
are better than those from other stock markets in the region. 

Daily trading volume at the Jakarta Stock Exchange, although still dominated 
by foreign and local institutional investors, has also grown sharply during 
the past five years. This indicates the stock market in Indonesia has become a 
better place for investment, as investors can easily find sellers of the shares 
they want to buy, or buyers of the shares they wish to sell. 

Data on the growth of the exchange's market capitalization is, however, quite 
worrying. Compared to other stock exchanges in the Asian region, market 
capitalization is still quite small, totaling only about US$100 billion, compared 
to $148 billion in Malaysia and $294 billion in Singapore, or $752 billion in 
South Korea and $1,213 billion in Japan. 

With a capitalization of only $100 billion the exchange is certainly too 
small for global players. As is usual for such small markets, trading is usually 
dominated by certain stocks, mostly those issued by large companies, and major 
foreign investors have limited choices for increasing their investment 
portfolios. This means that our market is still less attractive than other stock 
exchanges in the region. 

The small growth in market capitalization also reflects a declining interest 
on the part of the business community to float their shares on the exchange. 
As indicated by the data, there have only been 86 debuts on the exchange in the 
last five years. 

Of these 86, 31 companies entered the market in 2001, 22 in 2002, six in 
2003, 12 in 2004, eight in 2005 and seven during the first semester of this year. 
These numbers should be the main concern of the capital market authority and 
exchange operators, because they could indicate that the stock market is no 
longer an attractive option for the business community in raising funds for their 
businesses. 

Compared to the number of debuts in the early 1990s, during the early stages 
of the stock exchange's development, the current numbers are quite small. In 
1990 alone, the number of new debuts reached as many as 65 companies. 

There must be a reason the number of new listings continues to decline, 
because there are a growing number of medium-sized companies out there looking for 
cheaper funding sources to avoid expensive bank loans, not to mention the 
dozens of larger companies that require great amounts of funds to finance their 
expansion. 

For medium-sized companies, "going public" could be too costly because not 
only do they have to hire expensive financial and legal consultants to prepare 
the public offering, but there is also the cost of issuing documents needed for 
a public offering, such as a prospectus. 

The problem could also be due to a lack of interest from the investing 
public, as many companies have delayed public offerings due to the lack of market 
response. But whatever the problems are, Bapepam, as the capital market 
authority, as well as the operators of the existing stock exchanges, should be able to 
find a solution. 

They have to become better salesmen instead of just waiting behind their 
comfortable desks. Perhaps they should learn from former Bapepam chairman Marzuki 
Usman, who was able to attract hundreds of companies to list their shares on 
the stock exchange during the early stages of the country's capital market 
development. 

Marzuki also was able to convince the public that investing in the capital 
market was a wise investment. No wonder that during his reign, thousands of 
people were willing to stand in line for hours just to buy 100 shares offered by 
market debutants during their initial public offerings, simply because they 
were sure that investing in the stocks would give them good returns. 

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Joyo Indonesia News Service
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