Moody's Investors Service has assigned Baa2 ratings to the proposed senior unsecured US Dollar notes to be issued by the Government of Indonesia (Baa2 stable) - Photo by the Ministry Office

JAKARTA (TheInsiderStories) – Indonesian government issued new provisions regarding government investment through a presidential decree Number 63 of 2019. Based on the new rule, in the future central government will focus on investments in the form of securities such as shares, debt, and other notes like mutual funds.

The executor of the government investment by finance ministry. To run the new regulation, the ministry need to establish the public service agency or state-owned enterprises and other legal entities.

The fund managers who can cooperate the entity must have a business license as a securities company that conducts business activities as an investment manager from Indonesia Financial Service Agency (FSA). The fund managers must also never be subjected to administrative sanctions in the form of restrictions on business activities or freezing from the the regulator.

In addition, the managers must have experience in managing funds of Rp5 trillion (US$354.61 million) and must have representatives who have not been subjected to FSA administrative sanctions for the past five years.

In the same article, the purchase of securities is also limited to debt securities issued by companies, governments and other countries. The debt securities purchased must also offer the option of purchasing debt securities again.The debt issuer must commit to repurchase the debt if the government sells before its mature.

In the new regulation, the shares that can be purchased listed or non-public listed companies. While, for notes, the investment could be in the form of debt securities or SUKUK issued by the government or regional governments, corporate or other legal entities, governments of other countries, and foreign corporations or legal entities.

FSA hope the direct investment go to Indonesian financial market could reached Rp190 trillion in this year. Until second week of September, total funds enter the domestic market worth of Rp130 trillion.

According to chairman of FSA Wimboh Santoso, his office will continue to work hard to attract more companies go public, issue bonds and other instrument to boost the direct investment enter the market. The ways that FSA, government and Bank Indonesia (BI) will do are create conducive market, rise the ease of doing business, produce friendly policies and incentives.

Then, the government will also facilitate the licensing of companies going to initial public offering (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.”

Based on FSA data, 45 Indonesian companies are ready to conduct an IPO in this year. In 2018, as many as 58 companies have conducted IPOs with fund raising of Rp16.42 trillion.

Througout first semester of 2019, investment realization reached Rp395.6 trillion, up 9.40 percent compared to 1H 2018 of Rp361.60 trillion. These investment originating from domestic reached Rp182.8 trillion and foreign investment realization worth of Rp212.8 trillion.

The agency noted that investor confidence in Indonesian market was supported by external sentiment, namely US-China trade war tension. From the internal side, domestic political stability began to be felt after presidential election.

Five countries investing in IH of 2019 are Singapore $3.4 billion, Japan $2.4 billion, China $2.3, Hong Kong $1.3 billion, and Malaysia $1 billion.

US$1: Rp14,q00

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