Monday, 16 June 2014


Financing at the capital market was getting more varied. Very soon PT KPEI would offer facilities to harness fund through securities Financing. The clearing authorities would invite clearing members to do security exchange transaction the bilateral way.

Of course there was requirements and mechanism before enjoying this facility. In accordance with the regulation of the authorities, this facility was available through clearing member as borrower, or clearing member as lender, and custodian bank.

Investors, individuals or institutions, could contact clearing member or custodian to borrow or lend security. Long term investors, who so far only keep their security, had the opportunity to make profit by lending security through clearing member for a percentage of lending fee.

Meanwhile traders could transact more actively by borrowing security for short selling transaction if transaction if price of share was predicted to drop. Short selling transaction by benefiting from PME facilities could only be done by agreement. Meanwhile guarantee by underwriter could be used for preventing failure in stock transaction. The same was with application of Alternate Cash Settlement [ACS] or the process of exchange of share into money.

So far, shares which permitted for transaction as PME facilities were only shares included in LQ45 group and shares which belonged to margin and short selling facility. The shares must be listed in C-BEST [deposit and clearing system] which so far had been managed by PT Kustodian Sentral Efek Indonesia [KSEI]. The shares included in PME securities must be owned by at least 300 shareholders.

Shares which deserved to be listed in PME facilities must fulfill minimum daily transaction of at least 500,000 shares in the past 6 months, with average daily transaction frequency of at least 20 times over the same length of time. KPEI also set requirement for clearing members who could obtain PME facilities i.e. clearing member must be already listed 2014. In the end, there was deficit in trade balance amounting to USD 1.96 billion.

The big deficit was on account of deficit in oil gas trading amounting to USD 1.06 billion. Also non oil-gas trading which had been normally surplus was now in deficit of USD 901.5 million. And yet last March non oil-gas trading posted surplus of USD 2.04 billion. Accumulatively trade balance from January to April posted deficit of 894 million.

For information, previously BI predicted trade balance in April would post deficit. The main cause of deficit was swelling import. Be informed that trade balance in the past 2 months, i.e. February-march posted surplus of USD 785.3 million and USD 673.2 billion respectively.

Pressures on trade balance also came from export of raw mineral which shrunk significantly. As known, the Government only permitted export of processed or according to Law No 4/2009 on Mineral and Coal Mining [Minerba].

As Indonesia’s overseas debt expanded while financial resources for repayment was suppressed, in the future it was necessary to make sure that foreign debt was under control. GOOD NIGHT. In Government’s policy there were some directions on how to manage overseas debt among others the need to be gradually set free from dependency on overseas debt. The objective was to reduce debt.

It was also necessary to run an integrated system in managing overseas and local debt so it was possible to run swap between overseas and domestic debt toward attaining minimum cost and risk.

Considering its complexity, foreign debt should be managed more intensively by a special body. The objective was among other to develop primary and secondary market of Government’s bond to lessen debt burden especially those originating from abroad. Development of Government’s bond market was expected to promote private bond market; while interest rate of Government’s debt [SPN] could serve as benchmark for all monetary and fiscal policy.

Debt Management included the following steps:

Firstly, to monitor and analyze risk in the existing debt structure, and to recommend correction on debt structure of the future. The debt and risk was expected to be synchronous with cash flow, to avoid risk of failure in fulfilling obligations.

Secondly, maintain transparence and public accountability. To ensure transparence and public accountability, there must be openness in the debt management aspects as well as information on Government’s financial condition, Government’s asset and obligations and auditing of all debt management activities.

Thirdly, to underscore the new paradigm that overseas debt was only complementary or second alternative in state’s income in APBN State Budget so the Government still had to rely on main income resources. i.e. tax and non-tax income [PNBP].

In the next period, policy should be focused on efforts to step up efficiency in debt management by still observing risk indicators the measurable way. Such could be scheming up policies for debt management whether through SBN State Promissory Notes or loan. In managing SBN policy was focused on increasing liquidity and absorption of domestic SBN, whilst in relation to credit instrument, policy was focused on various efforts supportive to promoting quality of management.

In view of the widening scope of discussion of Government’s debt management in the future, various current issue had been accommodated in the concept, among others asset and liability management, contingtent liability, coordination and communication with stakeholders of debt management.

The strategy was schemed up as guideline for state’s debt, whether in the form of security or non security, in cash loan related to Ministrial or BUMN activities/regional governments through continued credit but not inclusive of policy on contingency obligation.

Debt management in the form of loan for activity was not fully exercised by debt manager unit considering there were various institutions which played the role some stages of debt management. Debt in the form of security consisted of conventional bonds and Syariah whether in the form of Rupiah and foreign currency, while non security debt was in the form of loan which could originate from internal or external resources.

Businessworld of the private sector must have strategy related to their overseas debt so there would be no serious problem in the future. It would be all right for national corporation to borrow money from abroad provided they market their products also abroad there would be natural hedging and producers would avoid currency mismatch. (SS)

Business News - June 4, 2014

No comments: