Jakarta (TheInsiderStories) – Indonesian Stock Exchange (IDX) optimistic 60 companies will conduct an initial public offering (IPO) in this year, the director told media today (09/16). The target higher than this year targets to list 57 companies during 2019.
In 2018, as many as 58 companies have conducted IPOs with fund raising of Rp16.42 trillion (US$1.17 billion). For this year, said director at IDX, IGD Nyoman Yetna, there are 22 companies will hold IPO from recently 34 companies had listed their shares at the local bourse.
He said, the regulator will continue to explore potential companies to raise funds through the stock market. Until 2022, IDX is optimistic that they will pursue 1,000 new listed companies.
President director of IDX Inarno Djajadi believed, with the current number of 649 issuers, the target can be pursued if the bourse is able to capture at least 100 issuers per year. This number is not only IPO, but include mutual funds exchange traded fund, Real Estate Investment Funds, and infrastructure investment funds in the form of collective investment contracts.
Recently, chairman of Financial Service Authority (FSA) Wimboh Santoso stated, that the agency targeting direct investment go to Indonesian financial market could reached Rp190 trillion (US$13.57 billion) in this year. Until today, total funds enter the domestic market worth of Rp130 trillion.
He assured that his office will continue to work hard to attract more companies go public, issue bonds and release other instrument in the local bourse. The ways to reach those target, Santoso revealed, that FSA, government and Bank Indonesia (BI) will do are create conducive market, rise the ease of doing business, produce friendly policies and incentives.
The government will also facilitate the licensing of companies going to IPO and also facilitate companies to get projects so the financing needs of the capital market also increase. He adds, “The government is also multiplying supporting instruments to increase the number of companies that will issue shares or bonds.”
Indonesia has set up Government Regulation Number 42 Year 2019 concerning Procedures for Examination in the Capital Market Sector to carry out the functions, duties, and authority of regulating and supervising financial service activities.
This new rule has effective since June 25, 2019, and will revoke the Government Regulation Number 46 Year 1995. The regulation is expected to lift the performance of the Indonesian financial market, which is currently still shallow, compared to peer countries.
One of the facts that show the shallowness of the Indonesian capital market is the ratio of credit to gross domestic products (GDP), which is still low. The ratio only 37 percent of GDP, lower than Thailand which reaches 85 percent and Malaysia 115 percent.
Likewise, the stock market capitalization of GDP is only 46 percent, compared to Thailand and Malaysia reaching 96 percent and 110 percent. The outstanding of bond ratio to Indonesia’ GDP is also only 19 percent, while in Thailand and Malaysia it reaches around 80 percent and 100 percent.
The deepening of the financial sector is very important to the country. Not only to support the occurrence of economic stability but also to support the financing of economic development.
With limited sources of government and domestic funding, the use of financial resources from the private sector and abroad is very important.
Since 2017, Indonesian President Joko Widodo hoped that Indonesia’ stock market capitalization will be parallel to the Southeast Asian bourse. Currently, the market capitalization worth of Rp7,200 trillion or around 58 percent of Indonesian GDP (approximately Rp12,400 trillion).
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