Indonesian Capital Market

Corporate Governance has become a buzzword more people hear. It always raises the question: how do we know that a firm put into practice the principles of good Corporate Governance? It is not hard for companies to say that it has acted upon the principle which represents fairness, transparency, accountability and responsibility. Although it needs a systematic assessment to assure whether a company really deploys those principles.
In fairness, minority stock holders will be guaranteed; transparency will increase punctuality and accuracy of a company’s information on performance; accountability will create an effective control system in accordance to the distribution of power; and responsibility will increase reliability between stakeholders and the environment.
a. Corporate Governance
The Indonesian government and International Monetary Fund (IMF) introduced the concept of good corporate governance as sound corporate management for economic improvement of Indonesia. It was hoped that the concept can guarantee the future of stockholders and creditors. According to Asian Development Bank (ADB) research the sources of economic crisis in Asian countries including Indonesia are:
�� Dysfunctional supervising system of board of directors and audit committee in securing stockholders importance
�� Unprofessional corporate management
It is hoped that the concept of GCG can increase stockholders professionalism and welfare without jeopardizing other stakeholders. GCG is a system that organizes and controls a company to create added value to all stakeholders. The main framework in GCG are:
�� The importance of stockholders to gain accurate and punctual information
�� Company obligation to expose corporate performance, ownership and stakeholders information accurately and punctually.
With four main components of GCG, fairness, transparency, accountability and responsibility.
Indonesia started to implement CGC principles since the signing of the Letter of Intent (LOI) with IMF, which contained scheduling of corporate management improvement in Indonesia.
b. GCG Principles
In order to guide the achievement of the principles, the National Committee of Corporate Governance has launched a book on Good Corporate Governance Guidance.


involved in such towards this Law and/or laws of conduct or other Party if necessary; and/or
4. Affirmed requirements and/or permits Party (ies) suspected to violate or have involved in such towards this Law and/or laws of conduct to perform certain action needed to complete loss emerged from the violation.
�� Investigation
In verse 101 (1) and (2), it stated that in opinion to Bapepam that violations towards this Law and/or Laws of Conduct cause impairment towards the existence of Capital Market and/or endangering investors and community, Bapepam affirmed the initiative to start the inspection, and a Civil Officer from Bapepam will be given special authority to conduct inspection to Capital Market criminal act based on rules of Kitab Undang-undang Hukum Acara Pidana.
The inspector is authorized to:
1. Receive reports, announcements, and complains concerning criminal action carried out in Capital Market;
2. Examine the veracity of reports or information concerning criminal action in Capital Market;

3. Examine Party(ies) suspected to conduct or involved in criminal act in Capital Market;
4. Request, inspect, ask for information and evidence from Party(ies) suspected to conduct or witness criminal actions in Capital Market;
5. Inspect bookkeepings, notes and other documents related to criminal act in Capital Market;
6. Inspect every location suspected to have evidence of bookkeeping, notes and other documents, and hold them in custody as evidence to criminal act in Capital Market;
7. Block bank accounts or other accounts in financial institution of Party (ies) suspected to conduct or involved in criminal act in Capital Market;
8. Ask expert opinion in performing the duty as inspector in Capital Market; and
9. affirmed when the inspection starts and ends.
Moreover, Bapepam are in cooperation with Police Department, Board of Attorneys, the Department of Justice and Human Rights, Center of Financial Transaction Analysis Report (PPATK), and Commission for the Supervision of Business Competition (KPPU) of the Republic of Indonesia.
c. International Relations
In compliance to providing improvements to the Indonesian Capital Market, Bapepam joins international relations with foreign market.
Bapepam signed several bilateral MOU’s and LoI’s with foreign regulators in information, experience exchange and law enfocement.
In multilateral perpective, Bapepam actively participated several international organizations, such as ASEAN, APEC, World Bank, ADB, IMF, and IOSCO.
In IOSCO, a world body of Capital Market regulators, Bapepam is one of the first countries outside Americas besides France, Korea and England since 1984. As one of active member of IOSCO, Bapepam are in line with IOSCO’s development and acitivities such as discussions concerning strategic steps of capital market, became a member in several committees, working groups and task force within IOSCO, as host of IOSCO’s meetings, filling out questionaires regarding capital market development, fulfilling several IOSCO resolutions, conducting IOSCO Self Assessment towards IOSCO Objectives and Principles Methodology, and in effort to become one of the signatories of Multilateral MoU.
Link to : http://www.iosco.org/, http://www.world-exchanges.org