Indonesia Not Ready for ASEAN Capital Market Integration

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  • TEMPO.CO, Jakarta – As the Association of Southeast Asian Nations (ASEAN) recently looked towards integrating their capital markets, officials said Indonesia is not prepared for it. A Financial Services Authority (OJK) official said the domestic capital market needs to improve first, especially in terms of infrastructure, regulations, and the quality of its manpower.

    "Judging from the domestic conditions and other factors, capital market integration is not something that can be implemented next year," Sardjito OJK deputy commissioner of capital market supervisory spoke at the Capital Market Outlook event in Jakarta, Monday, November 17.

    According to Sardjito, Indonesia's capital markets still have their weaknesses such as minimum capital, low implementation of good corporate governance, as well as limited instruments. In addition, the OJK is also concerned about the small number of issuers, with just 502 companies listed.

    Meanwhile, Citigroup's chief country officer Tigor Siahaan said that integration would help advance the domestic capital market. An integrated capital market, he said, will increase the penetration of the domestic market.

    However, in order to succeed in the market integration, Indonesia must face and overcome the existing challenges, one of which is the quality of human resources. In addition, the government must have clearer regulations in order before embracing the integration concept.

    "We need to have clear guidelines regarding domestic and foreign investments," said Tigor.