Indonesia Stock Market History

Historically, the stock market has been present long before Indonesia's independence. Capital markets or stock exchanges have been present since the Dutch colonial era, and precisely in 1912 in Batavia. Capital markets when it was founded by the Dutch colonial government for the benefit or VOC.Although the stock market has been around since 1912, the development and growth of capital markets is not running as expected, even in periods of capital market activities have a vacuum. This is caused by several factors such as World War I and II, the transfer of power from the colonial government to the government of the Republic of Indonesia, and a variety of operating conditions that cause the stock market can not function properly.The Government of the Republic of Indonesia to re-activate the capital market in 1977, and several years later as capital markets experience growth with a variety of incentives and regulations issued by the government.In short, the development of capital markets in Indonesia can be seen as follows:* December 14, 1912: The first stock exchange in Indonesia was established in Batavia by the Dutch East Indies government.* 1914 - 1918: Stock Exchange in Batavia was closed during World War I* 1925 - 1942: on the Jakarta Stock Exchange reopened along with the stock exchanges in Semarang and Surabaya* Early 1939: As a political issue (World War II) stock exchanges in Semarang and Surabaya closed.* 1942 - 1952: on the Jakarta Stock Exchange is closed again during World War II* 1952: Stock Exchange in Jakarta turned back to the Capital Markets Emergency Act 1952, issued by the Ministry of Justice (Lukman Wiradinata) and finance minister (Prof.Dr. Sumitro Djojohadikusumo). Instruments that are traded: Government Bonds RI (1950)* 1956: the nationalization of the Dutch program. Stock is not actively growing.* 1956 - 1977: Stock Exchange Trading in a vacuum.* August 10, 1977: Stock Exchange re-opened by President Soeharto. JSE is run under the BAPEPAM (Capital Market Executive Agency). August 10 is celebrated as the anniversary of the Capital Market. Reactivation of the capital market is also characterized by publicly listed PT Semen Cibinong as the first issuer.* 1977 - 1987: Trade on the Stock Exchange is very sluggish. The number of issuers until 1987 only reached 24. Community rather than an instrument of banking capital market instruments.* 1987: Characterized by the presence in December 1987 Package (This package 87) which makes it easy for companies to hold a public offering and foreign investors investing in Indonesia.* 1988 - 1990: The package of deregulation in the field of Banking and Capital Markets launched. JSE opens the door to strangers. Seen increased market activity.* June 2, 1988: Parallel Exchange Indonesia (BPI) started to operate and are managed by the Association of Exchange and Securities Trading (PPUE), while the organization is made up of brokers and dealers.* December 1988: The government issued December 88 Package (This package 88) which provides an easy company to go public and some other positive policies for the growth of capital markets.* June 16, 1989: Surabaya Stock Exchange (BES) began operations and is managed by a privately owned Limited Company that is Surabaya Stock Exchange.* July 13, 1992: The privatization of the JSE. BAPEPAM changed to the Capital Market Supervisory Board. This date is celebrated as the anniversary of the JSE.* May 22, 1995: Automation System trading on the JSE implemented a computer system JATS (Jakarta Automatic Trading Systems).* 10 November 1995: Government issued Law No. 8 Year 1995 concerning Capital Market. This Act came into effect starting January 1996.* 1995: Parallel Indonesia Stock Exchange merged with the Surabaya Stock Exchange.* 2000: Exchange System without paper (scripless trading) began to be applied in the Indonesian capital market.* 2002: JSE trading system to apply the long-distance (remote trading).2007: Merger Surabaya Stock Exchange (BES) to the Jakarta Stock Exchange (JSX) and changed its name to the Indonesia Stock Exchange (BEI).In the history of the Indonesian capital market, buying and selling activities of stocks and bonds began in the 19th century. According to the book issued by Verreniging Effectengids voor den Effectenhandel in 1939, buying and selling securities have been held since 1880.On December 14, 1912, Amserdamse Effectenbueurs stock exchanges set up branches in Batavia. In Asia, stock Batavia is the oldest of the four after Bombay, Hong Kong, and Tokyo.Colonization PeriodAround the beginning of the 19th century Dutch colonial government started building a large scale plantations in Indonesia. As one source of funding is from savers who have deployed their best. The depositor is made up of the Dutch and other Europeans whose income is much higher than the indigenous population earning.On this basis, the colonial government when it established the capital markets. Having made preparations, then finally officially established capital markets in Indonesia, located in Batavia (Jakarta) on December 14, 1912 and named Vereniging voor de Effectenhandel (stock exchange) and immediately begin trading.At the beginning there were 13 active members of the exchange (brokers) are: Fa. Dunlop & Kolf; Fa. Gijselman & Steup; Fa. Monod & Co.; Fa. Adree Witansi & Co.; Fa. A.W. Deeleman; Fa. H. July Joostensz; Fa. Jeannette Walen; Fa. Wiekert & V.D. Linden; Fa. Walbrink & Co; Wieckert & V.D. Linden; Fa. Vermeys & Co; Fa. Cruyff and Fa. Gebroeders.While the securities are traded stocks and corporate bonds / Dutch plantation operations in Indonesia, bonds issued by governments (provincial and municipal), corporations share certificates issued by the U.S. administration office in the Netherlands and the effects of other Dutch companies.Development of capital markets in Batavia was so rapid that it attracted other urban communities. To accommodate these interests, on January 11, 1925 in the city of Surabaya and Semarang August 1, 1925 was officially established in the exchange.Members of the exchange in Surabaya at that time were: Fa. Dunlop & Koff, Fa. Gijselman & Steup, Fa. V. Van Velsen, Fa. Beaukkerk & Cop, and N. Koster. While members of the exchanges in Semarang time were: Fa. Dunlop & Koff, Fa. Gijselman & Steup, Fa. Monad & Co., Fa. Companien & Co., as well as Fa. P.H. Soeters & Co.Development of capital markets was quite encouraging as seen from the value of securities listed which reached 1.4 billion NIF (if the index with the price of subsidized rice in 1982, its value is + Rp. 7 trillion) derived from 250 kinds of effects.World War IIAt the beginning of 1939 the political situation in Europe to warm temperatures with the mounting power of Adolf Hitler. Looking at these circumstances, the Dutch government took the policy to concentrate its securities trade in Batavia and Surabaya stock exchanges close and in Semarang.However, on May 17, 1940 overall trading activity is closed and issued regulations stating that all effects should be kept in a bank designated by the Government of the Netherlands East Indies. Closure of the three stock exchanges is very disturbing liquidity effects, complicating the owners of securities, and also resulted in the closure of brokerage offices as well as termination of employment. It also resulted in many companies and individuals are reluctant to invest in Indonesia.Thus, it can be said, the outbreak of World War II marked the end of the capital market activities in the Dutch colonial era.Active ReturnA year after the Dutch government to recognize the sovereignty of Indonesia, precisely in 1950, bonds issued by the Government of the Republic of Indonesia. This event marks the start active again the Indonesian Capital Market.Preceded by the publication of the Emergency Law No. 13 on 1 September 1951, which later ditetapkankan as Law. 15 of the Stock Exchange in 1952, the government of Indonesia to reopen the Jakarta Stock Exchange on June 31, 1952, after a halt for 12 years. The implementation is left to the Trade Union Money and Securities (PPUE) which consists of three state banks and some other securities broker with Bank Indonesia as an adviser.Since then the stock exchange is growing rapidly, although the effect is traded securities issued prior to World War II. This activity is increasing since the Industrial State Bank issued a bond loan in a row in 1954, 1955, and 1956. The buyers of bonds many Dutch citizens, both individuals and legal entities. All members are allowed to do transactions with foreign abitrase especially in Amsterdam.Period of ConfrontationHowever, this situation only lasted until 1958, because from then look downturn and the decline of trade in the Exchange. This is due to the political confrontation that launched the government of Indonesia to the Netherlands to disrupt economic ties between the two countries and resulted in many Dutch citizens to leave Indonesia.The development is in line with the more severe deterioration of relations of the Republic of Indonesia and the Netherlands regarding the dispute Irian Jaya and mounting the takeover of all the action of the Dutch company in Indonesia, in accordance with Law No Nationalization. 86 of 1958.Then followed the instructions from the Agency for Nationalization of the Netherlands (Banas) in 1960, a ban on the Indonesia Stock Exchange to trade in all securities of Dutch companies operating in Indonesia, including all securities bernominasi Dutch currency, further aggravating the effects of trade in Indonesia.The inflation rate at the time when it is high enough, the shake and reduce public confidence in money markets and capital markets, also against the rupiah currency which reached its peak in 1966.This decrease resulted in nominal value of shares and bonds is low, so it no longer attractive to investors. This is a tidal Indonesia Capital Market in the Old Order era.Step by step taken by the New Order government to restore public confidence in the rupiah currency. Besides the deployment of public funds through savings and deposits, the government continues to hold a special preparation to form the Capital Market.By decree No. BI directors. 4/16 Kep-Dir dated July 26, 1968, at BI in the form of team preparation (PU) and the Money Market (PM) Capital Markets. The research team showed that the seed of the PM in Indonesia the government has actually been planted since 1952, but because the political situation and the people still lay on the capital markets, the growth in the Indonesia Stock Exchange since 1958 s / d in 1976 suffered a setback.After the team completed the job well, then-Minister of Finance Decree No. Kep. Kep-25/MK/IV/1/72 dated January 13, 1972 the team was disbanded, and in 1976 formed Bapepam (Capital Market Board of Trustees) and PT Danareksa. Bapepam assigned to assist the Minister of Finance, chaired by the Governor of the Central Bank.With the formation of Bapepam, the seriousness and the intensity look to reshape the PU and PM. Aside from being a servant of the Exchequer, Bapepam also run a double function as supervisors and managers of the stock exchange.On August 10, 1977 by Presidential Decree No.. 52 of 1976 reinstated the capital markets and its going public several companies. At the time of the new order is the development of PM can be divided into two, namely 1977, s / d in 1987 and 1987 s / d now.Development of capital markets during 1977 s / d 1987 experienced a decline despite the government has provided facilities to companies which use the funds from the stock exchange. Facilities have been awarded, among others, tax facilities to stimulate the community to be active in the plunge and Capital Markets.Delays in the development of capital markets during the period was caused by several problems, among others, regarding the procedure of share issuance and the bonds that are too tight, the stock price fluctuation limits and so forth.To solve the problem, the government issued a range of developments relating to the deregulation of capital markets, namely in December 1987 Policy Package, Package Policy in October 1988, and Policy Package in December 1988.This package 1987This package is a simplification of the requirements of the 1987 emission shares and bonds, the abolition of fees previously levied by Bapepam, such as issuance fee. In addition it also opened the opportunity for foreign investors to buy securities capped at 49% of total emissions.87 This package also removes limits on stock price fluctuations and the stock exchange introduced the parallel market. As an option for issuers who have not qualified to enter the stock exchange.Pakto 88Pakto 88 perbankkan sector aimed at, but having an impact on the development of capital markets. Pakto 88 contains provisions about 3 L (Legal, Lending, Limit), and the imposition of tax on deposit interest.The imposition of this tax had a positive impact on the development of capital markets. Because the release of this policy means the government gives equal treatment between the banking sector and capital market sectors.This package 8888 This package is basically giving a further boost to the capital markets by opening up opportunities for the private sector to organize the exchange.Because these three policy becomes active capital markets for the period 1988 to present.At the time of the Capital Market was revived in 1976, established Bapepam, the abbreviation of the Capital Market Executive Agency.According to Presidential Decree No.52/1976, Bapepam in charge:* Conducting an assessment of the companies that will sell shares through the capital market if it has been determined eligible and healthy and good;* Stock Holding Capital Markets effective and efficient;* Continuous menurus follow the development of firms that sell shares through the stock market.Bapepam is headed by a chairman appointed by the President and the duties he is responsible to the Minister of Finance.End of DualismIn the beginning, besides acting as an organizer, Bapepam was also a builder and supervisor. But ultimately self-duality in this Bapepam dispensed in 1990 with the release of Presidential Decree. 53/1990 and Decree No. minister. 1548/1990.The exit of Presidential Decree 53 on the Capital Market and Finance Minister Decree No. 1548 marked the year 1990 a new era for the development of capital markets. The duality of function of Bapepam removed, so the agency can focus on coaching supervision of capital markets.With this function, Bapepam may realize the goal of creating an orderly capital market activities fair, efficient, and to protect the interests of investors and the public. Compared with the main tasks of the Securities Exchange Commission (SEC) in the United States, is almost the same task. SEC charge of maintaining the openness of capital markets in full to the investor community and protect the interests of public investors in the stock market malpractice.