Year 2000 was another tough and challenging year for Indonesian Capital Market. Some market indicators, such as composite index, daily trading values, and market capitalization of the two exchanges, Jakarta Stock Exchange (JSX) and Surabaya Stock Exchange (SSX) reflected the condition.

Nevertheless, the decreasing of those three market indicators, which was also experienced by some other exchanges in ASEAN countries, did not discourage Indonesian Capital Market participants to fulfill the mission stated in the Indonesian Capital Market Blueprint Year 2000-2004, especially in enhancing the Indonesian Capital Market readiness against global competition. Thus, in contrast with the descending market indicators, the Indonesian Capital Market also noted some important progresses, which has better positioned itself among other capital markets of international standard and quality.

Indonesian Capital Market’s trading infrastructure has entered a new era of modernized transactions by implementing the scripless trading and book-entry settlement system in the middle of the year. In the same period, two integrated institutions, Indonesian Clearing and Guarantee Institution (ICGI) and Indonesian Clearing and Settlement Depository (ICSD) have finished implementing their supportive infrastructures: electronic Clearing System (e-Clears) and Central Depository and Book Entry Settlement System (C-BEST).

Until the end of the year, from 287 Securities listed in Exchanges, 108 or 37.63% of them have been converted into scripless trading and the rest were expected to be done in year 2001. The application of the transaction mechanism and system has been through several phases, starting from planning, which involved experts in that area, adjustment to the international organizations standard, such as from Organization of Securities Commissions (IOSCO), International Federation of Stock Exchanges (FIBV), and International Securities Services Association (ISSA), tryout, socialization to all the exchange members, until its operation effectiveness in June 2000.

To improve market participants’ productiveness and to increase domestic investors participation and access to capital market, Securities Companies that are Exchange Members were encouraged to open branches and representative offices in various places in Indonesia. They were also given an opportunity to have join venture agency with Securities Companies that were Non-Exchange Members in order to broaden the marketing range to other potential areas in Indonesia.

In accordance with the above attempt and the forthcoming regional autonomy, this year the Indonesian Capital Market 23rd Anniversary was focused on capital market socialization to the public, businesses, and regional government, among other by holding National Capital Market Seminars in four big cities in Indonesia.

In law enforcement, this year Bapepam has been more proactive and dynamic in handling and accomplishing capital market violation cases. Among 39 cases, 28 of them have been accomplished in year 2000. The sanctions were also more varied, rather emphasizing on increasing Issuer management and Public Companies’ self consciousness to honor and implement good corporate governance principles.

Besides, it has to be understood that the implementation of good corporate governance need not only a strong regulation frame work but also which is more important, the effort to educate the importance of its implementation by all parties. With respect to this matter, Bapepam will always support all efforts from all parties such as Indonesian Committee for Corporate Governance, Indonesian Institute on Corporate Governance (IICG) and Forum on Corporate Governance in Indonesia (FCGI) to intensify the socialization of good corporate governance implementation in Indonesia.

Bapepam also announced to the public the summary of a case investigation result together with its sanction imposed on the involved parties at the same time the sanction was ordered. This is a reflection of Bapepam responsibility to the public (public accountability) as well as opening a chance for public to give critics, advises, and comments to enhance Bapepam’s performance, especially in law enforcement in the future.

From the regulatory point of view, Bapepam has issued some new and revised rules, which have accelerated the above mentioned progresses and activities. Besides, it also has issued other new and revised rules fitted to international standard and quality.

For example, rules concerning securities offering have simplified the public offering process and realized the implementation of book building system, which is approved to be effective in increasing public interest toward securities offering. It is worth noting too, that some other rules issued this year, such as rules concerning conflict of interest, tender offers, material transaction and changes in main business activity, as well as public company takeovers, have contributed directly or indirectly to the acceleration of national economic recovery.

Last but not least, another turning point in year 2000 was the preparation of amendment draft of Law No. 8 Year 1995 concerning Capital Market . This amendment was intended to enhance Bapepam independence as supervisory institution as mentioned in The Guidelines of State Policy 2000-2004, as well as the Indonesian Capital Market’s response to trends and paradigm changes occurring in international capital markets, such as the trend toward stock exchange’s demutualization, which allow stock exchange to be owned not only by their members but also other parties.

The preparation of this law amendment was a valuable milestone for Indonesian Capital Market participants as a member of world securities industry society, to show its commitment to IOSCO Resolutions, especially those related to Objective and Principles of Securities Regulation.

The more advanced the infrastructure, the more effective the market participants, the stronger the law enforcement, and the better the regulations under capital market law with international standard and quality, will enhance the Indonesian Capital Market international competitiveness. Those factors will also position Bapepam closer to its vision realization, i.e. to become international standardized capital market authority, which is able to encourage, supervise, and maintain market to be globally competitive and to support national economic growth.

Herwidayatmo,
Chairman