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1998 Annual Report:
Chairman's Statement During 1998, the Indonesian Capital Market was marked by numerous political issues and the extended economic crisis which hit the Asian region since mid 1997. In 1998 Indonesia experienced a severe economic crisis indicated by decreasing of economic growth to -13,68% compared to 4,8% in 1997. The inflation rate increased considerably from 11.05% in 1997 to 77.63 % in 1998. Daily average trading value on the Jakarta Stock Exchange decreased 17.5% from Rp 489.4 billion in 1997 to Rp 403.6 billion in 1998. However, market capitalization value increased 9,9% from Rp 159.9 trillion at the end of 1997 to Rp 175.7 trillion at the end of December 1998. In response to the crisis, the exchange rate of rupiah against foreign currencies, especially the US Dollar, weakened and fluctuated widely. This increased the rupiah debts of most Issuers and Public Companies and caused most share prices to decline to less than the nominal price. The unstable exchange rate of Rupiah has also reduced the interest of companies to make Initial Public Offerings (IPO) and Rights Issues. During the year there were 2 IPOs and 18 Rights Issues. In spite of the difficult situation, Bapepam attempted to enhance Indonesian capital market efficiency and issued policies to encourage Issuers and Public Companies to improve their financial condition. Bapepam as the agency which is responsible to guide, regulate, and supervise capital market activities, set an example of improving the efficiency by moving from the rented offices on Jl. Sudirman to the Ministry of Finance Office Building on Jl. Wahidin, Central Jakarta. With regard to the implementation of the scripless trading plan, Bapepam has approved the issuance of rules and procedures on scripless trading by the Jakarta Stock Exchange (JSX). One of the significant step in implementing book-entry settlement is the selection of a vendor to establish the Central of Depository System. The selection of a vendor was directed through a strict evaluation by the Clearing Guarantee Corporation-Central Securities Depository Team assisted by an independent advisor from Citibank. The vendor selected is a company with international reputation and experience. Bapepam also actively examined rules regarding operational procedures and internal control of the Central Securities Depository so that it would comply with international standards of internal control. During 1998 Bapepam also issued new rules and revised existing rules concerning various aspects of the capital market. With respect to the enhancement of the quality of Securities Companies’ performance, Bapepam issued rules on Net Adjusted Working Capital, containing requirements to be effective December 31, 1999. Bapepam also issued a rule regarding accounting treatment for Foreign Currency Transactions in response to the fluctuation of the Rupiah’s exchange rate against foreign currencies. In addition, Bapepam issued a rule which enables Issuers and Public Companies to increase their capital without giving Pre-emptive Rights, and reduced the time process of right-issue. Bapepam also gave opportunities to members of the exchange to analyze the JSX and Surabaya Stock Exchange (SSX) merger plan. In the effort to advance the quality of capital market participation, during 1998 Bapepam gave licenses to 704 new professionals. The licenses included 407 Broker-Dealer Representatives, 156 Underwriter Representatives, 19 Invesment Funds Sellings Agents, and 122 Investment Manager Representatives. Bapepam also gave Licenses to 10 Public Accountants, 8 Appraisers, 59 Legal Consultants, and 17 Notaries. In the unstable economic and political situation, a series of programs to be conducted in 1999 has been arranged focusing on following aspects: Continued implementation of the scripless trading and book-entry settlement plan; Strengthened Securities Companies performance; Improved law enforcement; Good corporate governance involving Self Regulatory Organizations.
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