Indonesia and Iran to jointly Develop Capital Market

Jakarta, Indonesia | February 02, 2008 by D-8 Secretariat

Indonesia and Iran set to cooperate on developing capital market industries in both countries through the signing of Bilateral Memorandum of Understanding (MoU) between The Capital Market and Financial Institution Supervisory Board of Indonesia (Bapepam-LK) and Securities and Exchange Organization of Iran (SEO), reported the Indonesian News Agency of ANTARA.

The bilateral MoU was signed by chief of Bapepam-LK, A. Fuad Rachmany and chief of SEO, Ali Salehabadi in Bapepam-LK office, in Jakarta, Indonesia, on Monday early this week.

Fuad Rachmany said that Iranian capital market are quite similar to that of Indonesia, and posseses the potency to grow in future. “Iran has many large state-owned companies which will enter the capital market. Their stock market is also developed, demutualisation has already been done, with market capitalisation around 50 billion USD,” he said.

According to Rachmany, that figure is still below Indonesia’s figure on 2007, though he believes the potency is there to be developed. “Iran started the initiatives to us, since they consider our capital market is one of the best in South East Asia, and firmed their interest to cooperate with us,” he added.

On the Iranian side, Ali Salehabadi said that the capital market development in Indonesia is quite impressing, besides the fact that the country is a majority moslem country. “We are brothers, and that is very essential for us to cooperate, including knowledge-, information-, and experience-sharing,” said Salehabadi.

Meantime, Ali Rahmani, chairman of the Tehran Stock Exchange (TSE), was quoted by IRNA as saying that the MoU between the two countries’ stock exchanges will allow Iranian and Indonesian companies to be listed in each other’s bourses. Subject to permission from the relevant Indonesian authorities, the Iranian stock exchange houses will be able to work alongside 24 Indonesian counterparts in Indonesia, he added. The Indonesian stock exchange officials are interested in having an active presence in the stock markets of the Middle East, a goal they hope could be more easily realized by forging bilateral cooperation with their Iranian counterparts, Rahmani noted.

“Given the fact that 70 percent of stock exchange transactions in Indonesia are carried out by foreigners, Iran can help finance its companies and attract more foreign investors via this cooperation,” Rahmani said, adding that the MoU with Iran was widely covered by the Indonesian media.

The value of exchanges in the Indonesian bourse is four times that of Iran, amounting to some $200 billion a year. Out of a population of 240 million, only 600,000 are said to have invested in Indonesian stock exchanges, with the rest going to foreign investors.

The bilateral cooperation will cover the information-sharing, and technical suppport that includes particular areas such as; first, skill exchanges, public information, and technical information regarding capital market to develop institutional capacity within the arrangement and industry supervisory of the capital market of both countries.

Secondly, is regarding boosting actualisation of growth potency of both countries’ capital market, especially syari’ah capital market industry. Thirdly, to develop training programs for staffs of both countries, as well as to players of both countries.

The cooperation will also include support grants and facilitation of information-sharing for both parties, in the framework of law enforcement in capital market based on law and regulations prevailing in both countries.

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