High Liquidity Attracts Investors

Fathan Qorib, Yanuar Pribadhie
 
High liquidity in the capital markets is an important factor for attracting investors to place their money in Indonesia and invest here. The Financial Services Authority (OJK) believes that liquidity in the Indonesian capital markets can be enhanced through the dynamic step of establishing a linkage between banks and the capital market, including non-bank financial institutions.
 
Muliaman Hadad, Chairman of OJK’s Board of Commissioners, has stated that a regulatory framework on such a linkage will create cross-institutional products between these parties. As a consequence, the problems of a lack of capital and improvement in the investment sector can be overcome.
 
According to Muliaman, in recent times infrastructure projects are one of the most-complained about issues by investors. The development of infrastructure projects, which require great amounts of money, will be hampered if investors merely rely on banks as their financial resource. This is due to the fact that more than 60 percent of banks’ funds are invested in short-term investment of no longer than three months.
 
“Bank’s capacity to provide loans is high, yet banks still need an equally high capital adequacy ratio. Therefore, linkage is the breakthrough resolution. The OJK is making efforts to develop a new paradigm for this linkage,” explained Mulaiman.
 
In addition to the linkage, the CEO of the MNC Group, Hary Tanoesoedibjo, believes that increasing the number of domestic investors is also a determining factor in ensuring high liquidity in Indonesia’s capital markets. As an investor, Harry sees that Indonesia has the potential for investment given the productive age demographic of the Indonesian population.
 
“50 percent of Indonesians are below 30. This represents a potential number for the growth of investment. Unfortunately, bureaucracy and corruption will hamper this potential,” said Hary.
 
Hary cites as an example that for toll roads there is a rule that the Government must bear the cost for landscaping if there is a hike in the value the toll road’s land. However, according to Hary, the Government has never delivered on this requirement.
 
(hot/kc)
Fathan Qorib, Yanuar Pribadhie
 
High liquidity in the capital markets is an important factor for attracting investors to place their money in Indonesia and invest here. The Financial Services Authority (OJK) believes that liquidity in the Indonesian capital markets can be enhanced through the dynamic step of establishing a linkage between banks and the capital market, including non-bank financial institutions.
 
Muliaman Hadad, Chairman of OJK’s Board of Commissioners, has stated that a regulatory framework on such a linkage will create cross-institutional products between these parties. As a consequence, the problems of a lack of capital and improvement in the investment sector can be overcome.
 
According to Muliaman, in recent times infrastructure projects are one of the most-complained about issues by investors. The development of infrastructure projects, which require great amounts of money, will be hampered if investors merely rely on banks as their financial resource. This is due to the fact that more than 60 percent of banks’ funds are invested in short-term investment of no longer than three months.
 
“Bank’s capacity to provide loans is high, yet banks still need an equally high capital adequacy ratio. Therefore, linkage is the breakthrough resolution. The OJK is making efforts to develop a new paradigm for this linkage,” explained Mulaiman.
 
In addition to the linkage, the CEO of the MNC Group, Hary Tanoesoedibjo, believes that increasing the number of domestic investors is also a determining factor in ensuring high liquidity in Indonesia’s capital markets. As an investor, Harry sees that Indonesia has the potential for investment given the productive age demographic of the Indonesian population.
 
“50 percent of Indonesians are below 30. This represents a potential number for the growth of investment. Unfortunately, bureaucracy and corruption will hamper this potential,” said Hary.
 
Hary cites as an example that for toll roads there is a rule that the Government must bear the cost for landscaping if there is a hike in the value the toll road’s land. However, according to Hary, the Government has never delivered on this requirement.
 
(hot/kc)
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