Message from Bursa Efek Jakarta Message from Bursa Efek Jakarta
Remarks from the Board of Directors
Indonesia: The Progress toward Sustainable Development
Quick Facts on the Indonesian Economy
Inside Jakarta Stock Exchange (JSX)
The Indonesian Capital Market Law No:8/1995
Members of Jakarta Stock Exchange
Jakarta Automated Trading System (JATS)
Information Dissemination Service
Welcome to
Jakarta Stock Exchange (JSX). The year 1996 marked the fourth year that the JSX is
operating as a private entity. During the period of four years, there has been a rapid
development in one of the strong emerging markets in Asia. The JSX began with the new
automated trading system or known as JATS on May 22, 1995 bringing speed, efficiency, and
transparency for our investor. Despite the sluggish condition of the global market, the
JSX managed to maintain its consistent performance in 1995. The market capitalization grew
by 46.6% in 1995 and the JSX Compose Index registered 9,41% higher than 1994.
The consistent growth of the Indonesian economy plays a significant role in the
development of the JSX. The second 25-year Long Term Development Plan which started in
April 1994, has called for greater participation of the private sector with regard to
their active investment in the countryís development projects. JSX is committed to
provide an efficient and liquid facility for companies to raise needed capital to finance
their investment activities. At the same time, JSX aims to attract more domestic and
foreign investors to tap into this growing market.
The future holds promises for JSX. Through JATS, JSX can ensure an efficient, fair, and
transparent trading practice that is necessary to mobilize resources within the Indonesian
economy. The upcoming remote trading system will allow market players to access JSX
electronically from around the country. Furthermore, our plan to launch the scripless
system will further enhance the level of efficiency and investorsí confidence in our
market. Indeed, the JSX is committed to facilitate efficient resources mobilization as our
nation strives toward sustainable growth in the new global market.
We hope the information presented in our booklet will be useful for your investment
decisions. We invite you to explore one of the most exciting markets in the Asia Pacific
region.
Thank you for your keen interest on JSX and the Republic of Indonesia
30 April 1996
D. Cyril Noerhadi
President Director
Jakarta Stock Exchange.
The Republic
of Indonesia celebrated its 50th anniversary of Independence on August 17th, 1995.
Indonesia has taken a long journey to become one of the emerging economies in Asia
characterized by consistent economic growth, strong level of domestic and foreign
investment, and prudent fiscal and monetary policy. The emerging economy of Indonesia
maintained annual economic growth rates of 6.5% in the first 25-year Long Term Development
Plan. Coupled with various deregulation measures in the late 1980s, Indonesia has
gradually transformed into one of the industrialized economies in Southeast Asia driven by
the active participation from the private sector.
The first 25-year Long Term Development Plan laid firm foundations to prepare the
Indonesian economy as it faces the era of trade and investment liberalization. Exorbitant
inflation rates and negative growth rates of the Gross Domestic Product illustrated the
early days of the Republic of Indonesia after its independence. The New Order government
under the leadership of President Soeharto who took office in 1968, began the arduous task
to rebuild the countryís economy and restore the nationís credibility at the
international level. Series of Five-Year Development Plans (PELITA) based on three
frameworks of national development of known as the development trilogy -- stability,
growth, and equity -- were undertaken to prepare the country toward sustainable
development. Active investment of infrastructure and various community projects and series
of steps in diversifying the nationís economy from heavy dependence on oil have brought
relative properity and stability to he country in the last 25 years.
The Republic of Indonesia has entered the second 25-year Long Term Development Plan
since April 1994. The second long-term plan places emphasis on various areas namely:
sustained improvements in the standards of living for all Indonesians, sustainable rates
of economic growth, equitable distribution of the benefits of development programs
particularly in the Eastern region of the country, competent and highly qualified human
resources, and active participation of the private sector. In order for Indonesia to
maintain annual economic growth rates of 7,1 % in the Sixth Five-Year Development Plan or
PELITA VI (1994-1999), to a total investment of US$ 440 billion will be required in
various sectors such as infrastructure, utilities, telecommunication, and health-care. The
private sector is expected to supply 73% of the total investment in PELITA VI. The private
sector will need strong and liquid financial institution serving as their financial arms
to mobilize resources needed to finance their investment activities.
Consistent monetary policy and market deregulation are imperative for continued
economic growth and competitiveness. The role of the business sector as a national
development partner will increase during the Second Long Term Development Period. The
business sector will efficient and liquid funding sources to finance all its investment
activities. Close cooperation between the government and capital market managers is the
key to the creation of an efficient capital market as an alternative source of national
funding.
| Key Indicators | 1994 | 1995 |
| GDP Growth | 7.3% | 7.5% |
| Inflation Rate | 9.24% | 8.64% |
| Foreign Reserves (in US$ billion) | 11.35 | 13.25 |
| Prevailing Interest Rates | 14.27% | 15.73% |
While the Jakarta Stock Exchange (JSX) came into being as privately owned and operated
stock exchange on December 4, 1991, the roots of its establishment can be traced back to
the early part of this century. In 1912, under the auspices of the Dutch colonial
government, Indonesiaís first stock exchange was set up in Batavia, then the colonyís
administrative center and the future site of Jakarta.
Closed during the First World War and then reopened in 1925, the Batavia exchange
operated alongside parallel bourses in Semarang and Surabaya until 1942, when the
archipelagoís occupation by Japanese Imperial Forces curtailed further trading. In 1952,
seven years after Indonesia declared its independence, the exchange was reopened in
Jakarta, trading stocks and bonds issued before the war by Dutch enterprises. A
nationalization program launched in 1956, however, brought trading to a halt yet again.
Not until 1977 was the exchange reopened, this time under the management of the newly
created Capital Market Executive Agency (Badan Pelakasana Pasar Modal or BAPEPAM), an
institution answering to the Ministry of Finance. While trading activity and market
capitalization grew over the years alongside the development of Indonesiaís financial
markets and private sector ñ highlighted by a major bull run in 1990 ñ it was not until
the exchangeís privatization in 1991 under the ownership of PT Bursa Efek Jakarta
(Jakarta Stock Exchange, Inc.) that the JSX emerged as on of Asiaís most dynamic
securities market. As the result of the privatization of JSX, BAPEPAMís function has
changed to become the Capital Market Supervisory Agency (Badan Pengawas Pasar Modal).
The year of
1995 marked a new beginning for JSX. As of May 22, 1995, JSX has launched the Jakarta
Automated Trading System (JATS) to replace the manual trading system. The newly installed
automated trading system will facilitate greater frequency of share trading and ensure
fairer and more transparent market practise as opposed to the manual trading system. The
new trading mechanism will allow up to 50,000 transactions daily as opposed to 3,800 daily
transactions under the manual trading system. Already the automated system has facilitated
greater trading volume where the average volume of trading in 1995 increased 100.34%
compared to 1994. By December 1995, the market capitalization increased 46.62% to Rp. 152
trillion from Rp. 103 trillion in 1994. In addition, the JSX Composite Index closed 9,41%
higher at 513.847 compared to the end of 1994.
The year of 1994 marked a milestone for state-owned eneterprises to tap into the
nationís capital market. The trend toward privatization began in 1992 when PT Semen
Gresik, state-owned enterprises have the responsibility to develop the countryís
infrastructure and they will need to compete with the private sector to provide quality
service to the country. These state-owned firms need capital to finance their expansion
activities and the capital market serves as an attractive venue to raise their needed
capital. In October 1994, PT Indosat, a state-owned firm responsible to provide
telecommunication service in the country, went public in JSX and New York Stock Exchange.
In 1995, two state-owned firms namely: PT Tambang Timah and PT Telcom went public both in
the domestic and international markets. PT Tambang Timah was listed at the JSX, Surabaya
Stock Exchange (SSX), and London Stock Exchange.
PT Telkom was listed at both the JSX and SSX as well as New York Stock Exchange. PT
Telkom was the biggest listing in the history of the JSX with a capitalization value of
Rp. 24.73 trillion or 16% of the market capitalization. The domestic market absorbed a
larger portion of the PT Telkom offering than overseas market clearly indicating a
potential which should be fully developed. Since the privatization drive in 1992, total
funds raised in the domestic market reached Rp. 4.499 trillion or US$ 1.95 billion. In
1996, the government plans to continue its privatization program of its state-owned
enterprises, the privatization strategy can help to boost the domestic investorsí
participation in the market.
Throughout 1995, JSX has undertaken active campaign activities aiming to increase
domestic investorsí participation in the capital market. JSX has launched domestic road
shows in several Indonesian cities such as Bandung, Semarang, Bali, Batam, and Medan to
increase peopleís awareness and interest toward the capital market. The JSX has also
opened two informational centers known as Pusat Informasi Pasar Modal (PIPM) in Medan and
Semarang that serve as the informational and educational centres on the capital market.
The JSX has also opened two informational centers known as Pusat Informasi Pasar Modal
(PIPM) in Medan and Semarang that serve as the informational and educational centres on
the capital market.
Investors can monitor the market development through the installed Real-time
Information facilities at PIPMs. In addition, the JSX has forged a cooperation with
several educational institutions have set-up Pojok Bursa Efek Jakarta (the JSX Corner).
The JSX will continue to create information linkages with other institutions that will
ultimately increase peopleís awareness of the capital market as an alternative investment
vehicle. Continuous and consistent market development programs of the JSX will also
essentially help to increase the liquidity in the market that means a conductive
investment environment for both international and domestic investment.
On October 2, 1995, a new start was heralded for the Indonesian capital market
industry. The House of Representatives of the Republic of Indonesia (DPR RI) approved the
new Capital Market Bill replacing the 1952 Capital Market Law. The Capital Market Bill was
ratified by President Soeharto on November 10, 1995 and will be effective as of January 1,
1996. The essential features of Capital Market Law No. 8/1995, among others, include
openness obligations for all issuers in the exchange and a more comprehensive BAPEPAM
(Capital Market Supervisory Agency) authority in supervising the capital market industry.
Apart from providing a comprehensive legal foundation, Capital Market Law No. 8/1995
also opens new opportunities for several instruments and media in capital market
development. One of the media is open-end mutual funds, which will provide greater access
to investors who want to be involved in the capital market. As the largest economy in
Southeast Asia, the Indonesian Capital Market has the potential to emerge as a competitive
exchange in the region. This potential can be realized through the open-end mutual funds
industry where share ownership limits are not a hindrance to the investorsí participation
in the capital market. Apart from supplying the legal foundation to operate open-end
mutual funds, the new Capital Market Law also provides a legal framework for implementing
securities lending and borrowing activities and scripless trading. These activities are
expected to help increase Indonesiaís capital market synergy in the future. Capital
Market Law No. 8/1995 provides a strong Foundation for the Indonesian capital market
industry in facing the coming global competition era.
There are 197 securities houses acting as Exchange Members and shareholders in the JSX
with each shareholders owning one share. They consist underwriters, broker-dealers, and
investment management companies. Several international brokerage firms have established
subsidiaries through joint ventures with Indonesian companies. The joint-venture scheme
allows foreign brokerage firms to own 85% while the local partner owns 15%. All are
licensed through the Capital Market Supervisory Agency (BAPEPAM) and meet the paid-up
capital requirement established by Indonesian law for the various activities undertaken.
May 22, 1995
marked the new chapter of the development of the Indonesian capital market with the
implementation of Jakarta Automated Trading System (JATS) that replaced the previous
manual trading system. The automated trading system could not come at a better time for
JSX. The greater frequency of trading allows JSX to facilitate greater resources
mobilization within the Indonesian economy. The automated system will allow the
distribution of accurate information to all market players efficiently. JATS will
contribute to the greater investorsí protection as opposed to the manual trading
mechanism. JATS serves as an integrated system connecting trading, clearing and
settlement, depository, and broker accountancy system. JATS will be able to accommodate
50,000 transactions daily as opposed to 3,800 transactions with the manual system.
Gradually, JATS will help to realize the vision of JSX to become one of largest exchanges
in the Asia Pacific region with a strong base of domestic and foreign investors.
JSX also plans to launch remote trading mechanism accessible through JATS. With the
remote trading system, brokers can access their clients from all 27 provinces in
Indonesia. The JSX will approach the remote system in several stages in view of
Indonesiaís infrastructure and geographical condition. The ultimate objective of the
remote trading system is to provide greater access for all potential domestic investors to
JSX. Greater level of domestic investorsí participation at JSX will add to the marketís
liquidity which is an incentive for other domestic and foreign investors to tap into the
Indonesian market.
Foreign ownership of Indonsian securities is currently restricted to 49% of listed
shares, though the rules governing this are under review. The availability of foreign
shares, is continuously monitored and published every day. If 49% of a listed stock has
already been sold to foreign investors, foreigners can still conduct transactions among
themselves on the Exchangeís Foreign Board. If foreign-owned shares are bought by a local
investor, their status reverts to that of local ownership.
Trading on the JSX is conducted during two daily sessions. From Monday to Thursday, these run form 09:30 a.m. to 12:00 p.m. and from 13:30 p.m. to 16:00 p.m. On Fridays, the first session takes place from 09:30 a.m. to 11:30 a.m. and from 14:00 p.m. to 16:00 p.m. Securities traded on the JSX consist of common stock, bonds, convertible bonds, warrants, and rights certificates. Trading at JSX is divided into 3 market groups:
Regular Market follows the auction system of matching buying and selling interest, with
bidding conducted according to price and time priority.
Continuous trading is done in round lots of 500 shares with bidding increments of Rp.
25. Negotiated Market is conducted on separate boards by means of direct negotiation
between participating Exchange Members. Four types of transactions are possible: block
trading, crossing, foreign board trading, and odd lots. Block trading is conducted for
large-scale transactions of at least 200,000 shares. Crossing is performed by an Exchange
Member who represents both buying and selling interests. Foreign board trading is reserved
for transactions between foreign investors over stocks whose portion eligible to
foreigners has reached or exceeded its 49% limit. Odd lot trading is performed for
transactions involving less than 500 shares.
Cash Market is the trading of securities by means of direct negotiations on
cash-and-carry term. This type of trading is conducted on the sixth (T+5) and seventh
(T+6) days after the contract date by Exchange Members who have defaulted on the delivery
of securities by T+4. On the eight day (T+7) and thereafter, the Central Depository (PT
Kliring Deposit Efek Indonesia or KDEI) will conduct a cash market for and on behalf of
Exchange Members who were not successful in settling their obligations.
Applicable to both the buyer and the seller, stamp duty of Rp. 2,000,- is imposed on
each transaction.
Share price
measurement is conducted daily by JSX on the Jakarta Composite Stock Price Index, which is
compiled from the share prices of all companies listed on the Exchange and calculated as
geometric mean with a base of 100 for 1983. The Index, however, does not include prices as
the result of transactions in negotiated and cash markets, and warrants. Investors can
obtain updated data on JSX from JSX-Monthly which covers market data, trade figures,
exchange news, brokersí performance, and the Indonesian Capital Market Journal, a joint
publication between JSX and Jakarta-based Institute for Economic and Financial Research.
In addition, JSX publishes Weekly Statistics summarizing weekly trading, Factbooks, to
name a few of JSXí publications.
JSX also provides three electronic information services : Info Broadcast, an
interactive, real-time information service operating over dedicated phone lines; the
Bulletin Board system offering data files and reports that can be directly downloaded to
the userís PC via modem; and Data Feed, which distributes raw data from the trading floor
to the user and may be customized to suit individual requirements. The JSX also cooperates
with PT Telcomís Web on the internet.
Historical data and information concerning the Indonesian stock market is also supplied
via teletex by two Indonesian television stations: TVRI and RCTI. In addition, the
national public radio airs JSXí trading summary every morning.
Given JSXí ultimate goal to become one of the largest bourses in the Asian Pacific
Region, JSX will need to address the following agenda items:
| Indicators | 1994 | 1995 | 1996* |
| Market Capitalization (Rp. trillion) | 103.83 | 152.25 | 187.04 |
| Listed Firms | 217 | 238 | 237 |
| Average Daily: | |||
 Volume (in million shares) |
21.6 | 43.28 | 92.25 |
| Value (in Rp. billion) |
104.01 | 131.53 | 277.69 |
| Trading Days | 245 | 246 | 78 |
| JSX Composite Index | 469.64 | 513.847 | 623.909 |
| *: as of the end of April 1996 | |||
| Source: Jakarta Stock Exchange |
