Indonesia Seeks Bigger Role for Capital Markets

Jakarta Globe, By Aditya Wikrama

Finance Minister Sri Mulyani Indrawati. (JG Photo/ Afriadi Hikmal).

Finance Minister Sri Mulyani Indrawati said on Monday that the government is determined to find ways for the capital markets to contribute more to the growth of the real economy.

“We will continue to enhance our cooperation with the capital markets, based on mutual trust, and we’re committed to growing our industries this year,” Sri Mulyani said at the annual opening of the Indonesia Stock Exchange (IDX).

The government plans to accelerate infrastructure development, including the second 10,000 megawatt electricity-generation project, as part of its strategy to boost industrial and economic growth. It will be looking to the capital markets for part of the financing, including through bond issues by state-owned electricity company PT Perusahaan Listrik Negara.

Edwin Sinaga, president director of brokerage PT Finacorporindo Nusa, said the government should make it easier for companies to raise money through bond issues or share offerings.

“The government should relax some regulations regarding bond or share offerings,” he said. “This should not reduce transparency but should increase the quality of the capital markets.”

Marciano Herman, managing director of state-owned securities firm PT Danareksa Sekuritas, said the firm would support the government’s efforts to finance infrastructure projects.

“We’re always on the lookout for quality issues, and we’ll support them if they would support the development in the real sectors,” Marciano said.

Sri Mulyani said the government and capital markets worked well together during the economic crisis. The Jakarta Composite Index rose 87 percent in 2009, after declining 50 percent in 2008.

However, she warned that there remained a danger of further financial turmoil and a second economic downturn, as Dubai’s and Greece’s recent financial troubles indicated.

“It could occur in any country, including Indonesia, if we’re not vigilant,” she said.

President Susilo Bambang Yudhoyono said his administration is targeting annual economic growth of 7 percent to 8 percent by 2014. The economy has grown by about 5 percent annually over the past five years, despite the 2008-09 financial crisis.

“We should keep up the good work, and prepare for the hard work to be done this year,” said Yudhoyono, who also was at the bourse on Monday.