Another development was the increase in the share of trading by local investors, which accounted for 65% of trading activity and the rest are foreign investors.

Increased stock trading reflected positive sentiments regarding the new government and expectation of political stability and economic recovery. In 1999, the gross national product increased 1.8% compared to 13.2% negative in the previous year.

The recovery of the capital market has allowed companies to utilize capital market as financing alternatives in capital restructuring. Many companies used pre-emptive rights issues to improve their financial position. The banking industry generally used proceeds from rights offerings to bring capital adequacy ratios into compliance.

During 1999, eleven initial public offerings and one public company submitted registration statements to Bapepam, with offerings totalling Rp 805.2 billion. In comparison only three IPOs and one public company submitted registration statements in 1998, with amount of Rp 68 billion. During 1999, there were thirty pre-emptive rights issues with a value of Rp 129.9 trillion. This was a sharp increase over the previous years with total of nineteen pre-emptive rights issues in the amount of Rp 5.07 trillion.

In order to improve financial statements disclosure, Bapepam began a review of accounting rules and make changes to bring requirements in line with international accounting and reporting standards. Bapepam has advised public companies to follow Financial Accounting Standard Report Guidance and International Accounting Standards.

To enhance market efficiency, Bapepam encouraged Self Regulatory Organizations (SROs) and other market participants to implement scripless trading and book-entry settlement by the first semester of 2000. Bapepam has approved SRO rules on scripless trading, clearing and settlement and central collective custody services.

During the year, Bapepam issued five rules, three of which were revisions of former rules. New rules covered procedures for collecting administrative fines and guidelines for subordinated loan agreements. Revised rules were issued on criteria for recruiting and selection of commissioners and directors of stock exchanges and on maintenance and reporting of net adjusted working capital. Bapepam postponed implementation of the Net Adjusted Working Capital rule until April 1, 2000.

To anticipate the possibility of Y2K problem, Bapepam established a Capital Market Y2K Committee and the Millenium Event Management Y2K System. Bapepam worked together with the SROs to demonstrate to investors and other market participants that the capital market was ready to face new century.

To improve disclosure and company supervision, Bapepam encouraged issuers to heed corporate governance guidelines in line with investor expectation.

The Indonesian capital market continues to develop to be a dynamic and sound capital market. Bapepam continues to meet its regulatory and supervisory obligations, with special emphasis on enforcing compliance under the disclosure principle and the establishment of a fair, orderly, and efficient capital market.

© 1999 Bapepam, All Rights Reserved. Notice.