TEMPO.CO, Jakarta - Vice President Jusuf Kalla lamented on the fact that the Indonesian capital market is not as advanced as other countries, partly due to the lack of public interest to invest in the sector. Kalla said most people still prefer to place their funds in deposits, which have higher interest rates that the yields returned from investing in the stock exchange.

Kalla said that to attract investors, bank interests must be stable and not too high. "In Singapore, the interest rate for deposit accounts is one percent," he said at the Indonesia Stock Exchange (IDX) building on Thursday, November 12.

In comparison, Indonesian commercial and rural banks currently give an interest rate of 7.5 to 10 percent.

Additionally, Kalla said, a lot of people still do not understand the mechanisms of stock market investment.

"Our society considers the stock exchange is only for a specific community and is considered dangerous," he said. "Deposits are of course safe, but we need investment to bring the country forward."

IDX president director Tito Sulistio said there are still many people who do not understand about investing in the stock market. This is unfortunate, given the fact that the capital market has given an investment return that is higher compared to other instrument in recent years.

Muliaman Hadad, board of commissioners' chairman of the Financial Services Authority (OJK), hopes that there would be more investors in the capital market to help support the financing of infrastructure projects. "We encourage the capital market to be the main funding source for state infrastructure projects," he said.

Right now, 65 percent of capital market investors are foreign. Foreign ownership in state bonds is also quite high at up to 37 percent.

Meanwhile, Hadad said, domestic investors only account for 0.3 percent of the total population. That is a very low figure compared to other ASEAN countries.

MAYA AYU PUSPITASARI | GHOIDA RAHMAH