TEMPO.CO, Jakarta – Muliaman Hadad, chairman of the Financial Services Authority (OJK), said that the Indonesian capital market industry developed into an important funding alternative. The capital market is able to provide long term financing that can cover for banks' limitation in doing so.
Over the past five years, Hadad said, capital markets managed to pool in Rp595 trillion from bond and stock issuances.
"The capitalization as of the beginning of [August] had almost reach Rp5,000 trillion, an increase of more than 60 percent in five years," Hadad said when attending the 38th anniversary of the Indonesia Stock Exchange (IDX) on Monday, August 10.
In the occasion, Hadad urged state-owned enterprises and private firms to utilize the capital market as a place to mobilize their investments.
President Joko Widodo, who also attended the event, asked capital market players that doubt his infrastructure development agenda to look directly at the construction progress. He wants market participants to have faith in and believe that the government is pursuing infrastructure growth.
Widodo admitted that budget absorption is still low, with only 12 percent of the budget used on capital expenditures as of June. But the president promised to absorb spending as much as possible in the second semester.
He said that based on his ministers' reports, budget absorption rate would reach 93 percent by the end of the year.