What is driving the record highs reached by the Jakarta Composite Index (JCI) in recent months?
The recent capital market surge was strongly influenced by global economic growth of 3.2% in 2016 and 3.7% in 2017. Stable domestic economic growth—5.01% in 2016 and 5.07% in 2017—also played a role. A credit rating upgrade to investment grade from all respectable global rating agencies was important, while a clean and focused government with a stable monetary policy and inflation also played a significant role. In addition, key was the strong growth of listed companies. For example, total net income grew 23% from 2016 to 2017. Strong domestic investors have aided this. Although there was foreign net sell as much as IDR40 trillion (USD2.83 billion), the JCI still grew reaching an all-time high.
What strategies do you employ to increase the number of companies listed on the IDX?
There are still many large companies not listed on the IDX yet. We have been promoting to the public that IPO is not only a way to raise funds for companies but is also a means to distribute wealth for its employees and the public through ownership of its stocks. The potential for companies to be listed is high. There are 52 companies that grew in Indonesia but are listed on foreign stock exchanges, more than 800 state-owned enterprises including their subsidiaries, 20 local conglomerates, and 124 companies with more than IDR1 trillion (USD70.6 million) debt that should be listed. Increasing the number of listed companies is one of our strategic objectives in our “Sailing North" strategic plan. We have a saying, “No day goes by without meeting prospective companies"—every day we promote fundraising through capital market. These successes are achieved through business meetings and one-to-one meetings. Since we began our campaign in 2015, we have held around 20 workshops for prospective companies each year in collaboration with various associations that oversee them. Moreover, we have around 200 individual meetings with companies every year.
How should the regulatory framework be amended to provide a more appealing capital market?
Since 2016, we have been working closely with Financial Services Authority (OJK) to simplify the listing process, reduce paperwork, and eliminate with duplication, which in turn shortens the IPO and listing process. In December 2017, OJK published new regulation about e-Registration for a new, simplified listing process utilizing information technology. Moreover, this e-Registration process will be integrated to OJK's Integrated Licensing and Registration System (SPRINT).
In June 2017, the number of capital market investors in Indonesia exceeded 1 million. What does this figure say about the size and scaling of the capital market?
Reaching 1 million investors is an achievement, and we are determined to keep pursuing our goal to make Indonesia's capital market an attractive investment for the long term. However, from 1 million investors, there are only 650,000 stock investors. To attract more investors, in November 2015, IDX started the Yuk Nabung Saham nation-wide campaign to shift the Indonesian mindset from savings to investing. Since then, there has been a double-digit increase of investors annually. According to a survey conducted by Nielsen in 2015 and 2017 and OJK's report in 2016, there has been a significant increase in capital market literacy for Indonesian, from 3.79% in 2016 to 15% in 2017. In terms of the size of Indonesia capital market among ASEAN countries, we are still growing. Our ratio of market cap to GDP in 2017 is at 52%; therefore, there is, room to grow in the coming years.
How has the digital innovation in finance become central to the trading floor of IDX?
IDX has been utilizing technology since 1995 by implementing a computerized trading system called Jakarta Automated Trading System. Since then, we have revolutionized the system and its supporting system to support the growing number of trading, investors, and products.