Government to go after stock market violators

The Jakarta Post, Sat, 10/11/2008

Aditya Suharmoko ,


The government is establishing a task force to help protect the slumping stock market from parties wanting to use "unhealthy" methods to benefit from the situation, Finance Minister Sri Mulyani Indrawati has announced.

Sri Mulyani said the Indonesia Stock Exchange (IDX) and the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) suspected some parties of involvement in such behavior -- one of the reasons the suspension of trading on the stock market was extended to Friday.

"If there are parties who want to reap gains while causing losses to others, there will be law enforcement. There will be a task force to deal with this," Sri Mulyani said.

The team will include officials from the Finance Ministry, the State Ministry for State Enterprises, the National Police, the Attorney General's Office and Bank Indonesia.

The police and the AGO investigators will be prepared to investigate any alleged criminal behavior in trading as early as Monday.

The market -- whose main index slumped around 21 percent in the first three days of this week -- may resume operation Monday, IDX president director Erry Firmansyah said.

Attorney General Hendarman Supandji said his office had reached a "preliminary conclusion that there are some parties trying to make use of the current situation in a bad way".

"We will be on the alert 24 hours a day," he said.

"In a time of crisis, there needs to be legal certainty, a stable situation."

Sri Mulyani said the government had decided to extend the suspension after also considering changes in risks following the drop in the U.S. stock market.

"We were not panicking, but we remained alert," she said.

"We always look at the rate of risks that change according to developments in the U.S."

She said the government had not closed the market out of fears the Jakarta Composite Index might drop as global stock markets crumbled.

"If there are (downward) movements, we will not fight it. But we do not want any parties exploiting the situation using bad means."

On rumors of a default by Bakrie Group, Sri Mulyani said Bapepam-LK and the IDX had requested the company provide a detailed and complete explanation about the rumors.

A public expos* is also necessary as "it is the company's responsibility to make a full explanation to shareholders".

In addition to the regional trend, another factor behind the Jakarta market's free fall from Monday to Wednesday was uncontrolled speculation about PT Bakrie & Brothers and its units, which dragged down the group's shares.

The decline in stock prices of Bakrie and its units, in particular PT Bumi Resources, was the main driver behind the index's 10.03 percent fall Monday, with transactions involving the group making up around a third of the total transactions.

The speculations center on concerns Bakrie will not be able to pay its short-term debts, which amount to $1.43 billion. The loans are backed by the shares of affiliated companies, including Bumi, PT Energi Mega Persada and PT Bakrie Sumatera Plantations.

Sri Mulyani also said the government had presented to the House of Representatives regulations in lieu of laws to amend laws on the deposit insurance agency, central bank and financial sector safety net, all designed to ease regulation and stimulate the financial sector.

The amendment will allow an increased limit of guarantee on bank deposits and the injection of liquidity into the banking sector by the central bank.


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