Indonesian government established a series of actions recently to bring back confidence into the Jakarta stock market, which was forced to suspend trading on Wednesday after the benchmark index plunged by 10.38 percent.
The Indonesian Stock Exchange attributed the sharp decrease of benchmark index to waves of panic selling amid the global financial turbulence.
Indonesian Finance Minister Sri Mulyani Indrawati said Thursday that the government need new measures to restore confidence and help ease fears of the country's financial sector on the crisis.
One of these measures is reducing the minimum reserve requirements, which means the funds stored by banks in the central bank, from 9.08 percent to 7.5 percent of the total deposits next month. Another one is easing the current bank deposit guarantee program by lifting the ceiling of deposits the program covers.
Besides, the central bank plans to let Indonesian banks use alternatives other than the mark-to-market scheme for debt accounting, said Miranda S. Goeltom, senior deputy governor of Bank Indonesia, adding that the scheme is a method for calculating security or portfolio based on the current movement of market value.
The government is also providing leeway for listed state-owned companies, especially those with good fundamentals, to buy back their shares, so that they can buy back up to 20 percent of their stock from paid-up capital, buy all traded shares in one-day trading, and buy back the shares without prior shareholder approval.
According to Sri Mulyani, Indonesia's Capital Market and Financial Institutions Supervisory Agency and the stock exchange will jointly protect Indonesia's stock market from speculators and will launch an investigation into the plunge of this week. The results will come to the National Police, the Attorney General's Office and the Corruption Eradication Commission, who are about to take legal measures against possible crimes on the market.
On the other hand, Indonesian government also plans to accelerate budget disbursement for development projects in the last three months of 2008.
"Speeding up budget disbursement is crucial to stimulating domestic industries and strengthening the domestic economy," said Paskah Suzetta, State Minister for National Development Planning.
Nevertheless, the Jakarta Stock Market continued the trading suspension on Friday, so as to "avoid deeper panic" as global markets plunged.
Source: Xinhua
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