Foreign firms urged to float shares at stock exchange

Foreign companies, whose assets and income originate in Indonesia, are being urged to float their shares on the Indonesian Stock Exchange (BEI) as an Initial Public Offering (IPO).

There are some 52 foreign investment companies in Indonesia that fall into these categories. If the 52 foreign firms have their shares listed on the Indonesian Stock Exchange, the BEI would value their total stake at Rp400 trillion.

Therefore, the BEI president director, Tito Sulistio, has delivered the list of the 52 foreign investment companies to Finance Minister Sri Mulyani Indrawati. The aim of the BEI is to ask the government to encourage those companies to launch IPOs on the Indonesian Stock Exchange.

Tito said there are 52 foreign companies conducting business in the country, having a potential of listing Rp400 trillion worth of shares on the BEI.

He said among those 52 companies, three have indicated interest in launching initial public offerings (IPO) at the BEI this year. Two of the foreign companies are operating in the mining sector, while the other is in the property sector.

"I have talked to the three foreign companies, two in the mining sector and one in property. They said they will float their shares through an IPO this year," Tito Sulistio said, following a meeting with Maritime Affairs Coordinating Minister Luhut Binsar Panjaitan in Jakarta on Thursday (January 5).

The BEI will communicate with the other foreign companies to encourage them to float their shares on the domestic exchange.

"We are still continuing communications. Some of the foreign companies are already listed abroad," Corporate Valuation Director of BEI Samsul Hidayat said in Jakarta on Friday (January 6).

There has not yet been any foreign companies listed on the BEI, though many Indonesian companies have floated shares on foreign stock exchanges. For instance, state-owned telecommunication company Telekomunikasi Indonesia (Telkom) is listed on the New York stock Exchange, according to Samsul Hidayat.

The shares of Telkom are listed in the form of American Depository Shares (ADS) through the American Depository Receipt (ADR) program. Samsul Hidayat said if the process of listing the shares of foreign companies ran well, progress is expected in the second half of the year.

According to Tito, the three companies have made significant profits in Indonesia and are among the 52 foreign firms which are expected by the BEI to also issue IPOs.

The total capitalization of the 52 companies could reach Rp300 trillion to Rp400 trillion.

"The three which will go IPO this year have medium capitalization. It is unfair for them to develop significant assets in Indonesia without being listed on the stock exchange here," the BEI president director said.

He noted that he had submitted the names of the 52 foreign companies to the finance minister so the government would encourage them to float their shares on the Indonesian stock exchange.

"It is not fair if foreign companies earn their assets and income in Indonesia, but their shares are listed on stock exchanges overseas. All Indonesian people should benefit from them. I ask for assistance from the government to encourage them to list their shares on the Indonesian Stock Exchange," noted Tito Sulistio.

The owners of the foreign companies are Indonesians and they use foreign names for their firms. The three companies have listed their shares on the stock exchanges of Singapore, Malaysia, Sydney and New York. 

Apart from the three firms, there is another which has listed in Australia. It belongs to Indonesian conglomerate Hary Tanoesudibyo, who also plans to float his companys shares on the Indonesian stock exchange.

"Earlier, Hary Tanoesudibyo listed his companys shares on the US Nasdaq stock exchange. Later, he listed on the stock exchange in Perth, Australia and now he is willing to list on the BEI," the BEI president director said.

The BEI president director has also met with Maritime Coordinating Minister Luhut B. Panjaitan to explain the workings of the Indonesian capital market and its problems.

"There are two problems now. The first one is regarding Indonesias rating, which is a reflection of the trust of investors. The second is weak liquidity," he said.

Indonesias rating by Standard & Poors is still at the BB+ level, regardless of the fact that Indonesia has provided good fiscal management and a relaxation of regulations, while Indonesias economic fundamentals show positive conditions.

Earlier, Financial Service Authority (OJK) Chairman Muliaman Hadad said the growth of the Indonesian composite index in 2016 was the highest in the history of the Indonesian capital market, and the second highest in Asia and the Pacific.

Therefore, Vice President M. Jusuf Kalla called upon stock market players in Indonesia to continue improving the peoples trust in the exchange.

"The stock exchange should maintain the trust of many sides," the vice president said.

The BEI and composite index experienced a growth of 15.32 percent, closing at 5,296.71 in 2016.

In the meantime, the amount of funds gathered through the BEI trade in 2016 totalled Rp674.39 trillion and US$247.50 million, the highest value in Indonesias capital market history

Source: ANTARA