The Dynamics and Trajectory of Indonesia's Capital Market

The Indonesian capital market in 2023 has exhibited a positive trend, supported by several crucial factors that have laid a robust foundation for sustainable growth. Our Partner Tri Hartanto shares his thoughts on key aspects that contribute to the buoyancy of the market.

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Growth Indicators and Investor Confidence

The closing chapter of 2023, where a 4.09% surge in the Composite Stock Price Index (IHSG) left a positive imprint, reached a high of 6,850.52 points. Beyond the numbers, it set the stage for a positive momentum that carried over into the new year.

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At the core of this narrative is the surge in transactions, reflected in the increasing IHSG. It's a testament to the growing confidence of investors, mirrored in the rise of investor numbers to 11 million by May 2023. Notably, the threefold increase in mutual fund investors over two years highlights a robust trust within the investor community.

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Mid-2023 unfolded as a pivotal moment, with over 900 companies listing their stocks on the Indonesia Stock Exchange (BEI). This achievement opened new doors for companies to secure funds through the capital market. As of October 6, 2023, Rp 54.3 trillion has been raised, etching an impressive chapter in Indonesia's capital market history.

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Strengthening the Capital Market through UU P2SK

In the spirit of transformation, Indonesia embarked on a journey of significant legal reforms in 2023 with the introduction of Law Number 4 of 2023 on the Development and Strengthening of the Financial Sector (UU P2SK). This wasn't just a legal shift; it was a step toward inclusivity, fostering a stable financial system as a catalyst for the nation's economic development.

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UU P2SK, with its 27 chapters and 34 articles, replaced 17 existing laws related to the financial sector. This move was crucial, considering some of these laws had been in place for three decades. Adapting to the dynamic needs of society, especially in the evolving realm of the capital market, became imperative for the acceleration of national economic development.

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Firstly, UU P2SK broadened the definition of securities, embracing digital and carbon-based securities. This move paves the way for carbon emission trading to become part of the Capital Market ecosystem, positioning Indonesia as a key player in mitigating climate change while nurturing the domestic financial market.

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Secondly, the expanded definition of securities breathes life into the Indonesian Capital Market, empowering the Financial Services Authority (OJK) to develop market infrastructure. This foundation lays the groundwork for investments in technology, information systems, and modern infrastructure, aiming to enhance operational efficiency, transparency, and market accessibility for all stakeholders.

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Furthermore, UU P2SK focuses on regulating specialized entities, creating a balanced business environment where every participant in the capital market adheres to regulations aligned with their objectives.

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Law Enforcement in the Capital Market

Enforcing justice in Indonesia's capital market is more than a legal matter; it's an integral part of a system governed by the Capital Market Law. This law provides a comprehensive framework to regulate various aspects of the capital market, including provisions related to law enforcement.

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OJK takes center stage in this narrative, overseeing, regulating, and controlling activities in the market to ensure stability and consumer protection. A focal point is the enforcement of market regulations to maintain the integrity and trust of market participants.

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Administrative and criminal sanctions become the tools of choice in addressing violations. Administrative actions, such as fines, business activity suspension, or license revocation, are applied by OJK. Criminal sanctions, on the other hand, involve a more complex legal process and may engage other law enforcement agencies, such as the police and the prosecutor's office.

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In the context of capital market law enforcement, violations may include market manipulation, fraud, insider trading, and other offenses harming public and investor interests. The process starts with an investigation into alleged violations conducted by OJK or relevant law enforcement agencies.

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In addition, the judicial system plays a crucial role in resolving cases involving capital market violations. Courts decide on criminal sanctions against wrong-doers after a fair and transparent legal process.

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Enforcing capital market laws isn't just about penalizing violators; it's about creating a stable, fair, and trustworthy environment for investors. An effective legal enforcement system is expected to enhance public and investor confidence in Indonesia's capital market.

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Legal Consultants in the Capital Market

In this unfolding narrative, supporting roles take center stage. Accountants, public notaries and legal consultants play a pivotal role in maintaining market integrity. Ethical codes and professional oaths become the guiding lights, encouraging adherence to ethical norms and the obligation to report essential activities for transparency and market trust.

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According to data from OJK, the number of legal consultants in Indonesia's capital market increased from 453 in January 2023 to 459 in December 2023. This rise reflects the growing need for support from legal consultants, especially considering the evolving complexity of capital market regulations.

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The role of legal consultants becomes increasingly crucial, especially in the initial public offering (IPO) process. Aligning with the mandate of the Capital Market Law, legal consultants conduct legal audits and provide legal opinions. The accuracy of information presented in prospectuses becomes key, requiring a deep understanding of civil, criminal, and administrative aspects.

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In the context of going public, legal consultants bear the responsibility of ensuring that all information provided by companies going public is true, accurate, and in compliance with regulations. Legal audits conducted by legal consultants aim to identify potential legal risks related to civil, criminal, and administrative aspects.

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The importance of accurate information goes beyond regulatory compliance; it protects investor interests and maintains the reputation of companies going public. With the growing number of legal consultants, it is expected that they will make a positive contribution to maintaining the integrity and stability of Indonesia's capital market. The presence of trained and competent legal consultants becomes a key pillar in supporting the healthy and sustainable growth of the capital market.