The government is opening up Indonesia’s commodity exchanges to public ownership, including foreign investors, to attract more trading business to the bourses.
Indonesia, the world’s top exporter of thermal coal and refined tin, and the biggest producer of crude palm oil, is a major player in the global commodities market.
The decision would cover the two futures exchanges now operating in Indonesia; the Jakarta Futures Exchange (JFX) and the Indonesia Commodity & Derivatives Exchange (ICDX), both seen as small players and largely bypassed for other commodities-trading hubs such as the London Metals Exchange and the Bursa Malaysia Derivatives Exchange, Reuters reported.
“We are planning to allow foreign companies to own stakes in Indonesia’s commodity-future trading exchanges, of up to 40 percent,” Syahrul R. Sempurnajaya, head of the trade ministry Commodity Future Trading Regulatory Agency (Bappebti) told reporters.
Individual investors will also be allowed to own up to 10 percent of shares under the government’s plan.
By giving more leeway for foreign investors, the government aims to shift the non-profit nature of the current commodity bourse to a more profit-oriented one, according to Bappebti head of commerce bureau Robert James Bintaryo.
“Indonesia’s commodity exchange hasn’t been growing as much as we had hoped. Hopefully, the commodity bourses will have more drive to grow under pressure from more shareholders,” Robert told The Jakarta Post on Saturday.
He added that opening up the country’s commodity exchanges to foreign investors would boost the performance and accountability of the bourses.
Ultimately, the government was keen for the country’s commodity exchanges to be the price references for both local and foreign markets, Robert said.
The government’s plan was welcomed by the JFX. By attracting more investors, the company expects to have more funds for future investment. The two exchanges have launched or announced plans for a wide range of commodity contracts in recent months, but attracting adequate liquidity has often been a problem.
JFX director Roy H. M. Sembel told the Post that there had been some investors, both foreign and local, who expressed interest in buying shares in the JFX.
Both the JFX and ICDX are currently privately owned. The JFX is owned by 29 futures companies, while ICDX is owned by 12 shareholders, comprising key commodity businesses, futures broking houses and strategic technology providers.