One of Bapepam’s effort to strengthen the role of capital market as a source of financing was to provide companies with a vehicle for capital addition through pre-emptive rights issues.

In 1999, Bapepam registered 50 public offerings consisted of 11 IPOs, 30 pre-emptive rights issues, and 9 bonds offerings. Besides, Bapepam issued effective statements for one public company registration statements. Those conditions showed an improvement compared to 1998 in which there were only 23 public offerings, including three IPOs, 19 pre-emptive rights issues, one bonds offerings. Bapepam also released effective statements for one company conducting merger, three companies adding capital without pre-emptive rights issues, two companies conducting acquisitions, and one company declared bankrupt.

Value of rights offerings in 1999 increased sharply to Rp 129.93 trillion from Rp 5.07 trillion in 1998. Most of pre-emptive rights issuers were from banking sector.

The proceeds from the offerings were primarily planned for fixing the worsen financial condition due to economic crisis. Banking sector generally issued pre-emptive rights to satisfy Capital Adequacy Ratio (CAR) requirement as obligated in banking recapitalization. Whereas issuers from manufactures used pre-emptive rights to service mature debts or to restructure long term obligation.

Besides through public offerings, issuers restructured their capital through capital addition without pre-emptive rights and shares buyback. During 1999, there were 3 issuers adding capital without pre-emptive rights in conformity with rule IX.D.4 regarding Capital Addition without Pre-Emptive Rights and there were 3 issuers buying back shares.

Currently, Bapepam is revising rule regarding pre-emptive rights with respect to cum/ex rights time determination and rights trading period.

Another important development was the implementation of Financial Accounting Standard Statement started on January 1, 1999. The standard refers to international accounting standards adjusted to Indonesian law and business environments.

Some of the new financial accounting standards were; standard no. 46 regarding tax income accounting standards, standard no. 47 regarding accounting standard for land, standard no. 50 accounting standards on certain securities, and standard no. 54 regarding accounting standards for non performing debt. During the year, Bapepam has monitored the application of the new accounting standards through issuers and public companies regular reports.

The monitoring results revealed that many issuers and public companies had not applied the new accounting standards, particulary standard no. 46 regarding Income Tax. To deal with this, Bapepam obliged issuers and public companies to change the reports.

© 1999 Bapepam, All Rights Reserved. Notice.