Analysts urges mining firms to list on bourse

Mining companies should utilize bourse services in their efforts to secure profitability, rather than rely on the implementation of regional autonomy which gives newly-empowered regions control of Indonesia's rich mining resources, two leading analysts urged yesterday.

"We see the mining sector as one of the biggest prospects for Indonesia in the future," Head of Sigma Research, Yasso Winarto told the press, adding that saying companies will able to control their capital losses by listing on the bourse.

Winarto said public listing is a golden opportunity for mining companies to obtain fresh capital, rather than waiting for it to materialize from the banking sector.

"There is a need for major amounts of working capital ahead of the free trade era here in 2003. That's why we are urging the mining sector to utilize bourse services," he said after a seminar on the prospects for the mining, oil and gas industry in the era of regional autonomy presented by leading business magazine Capital in Jakarta yesterday.

So far only six mining companies are listed on the Jakarta Stock Exchange compared with the hundreds of mining companies now operating here.

"The mining sector will achieve faster growth by using capital market services in the form of sale of shares, bonds or other derivative instruments," he said.

Winarto added foreign mining companies are not yet familiar with the market here, although listed companies perform better financially speaking than non-listed companies.

Winarto said the government needs to resolve the uncertainty in the political and security situation here. This would provide some reassurance for investors in public-listed mining companies. "Capital market services are low-cost financing alternatives for the mining sector," he added.

Hendra Bujang, a research investment analyst from PT Meridian Capital Indonesia, said mining company shares have declined on the Jakarta Stock Exchange in comparison with blue chip shares such as cigarettes.

"We should look at mining problems from a global perspective such as law enforcement, macro economic conditions as well as from the capital market side," he said.

Bujang said if mining shares continued to decline, public confidence in the capital market, especially the mining sector, would also decrease.

However both analysts urged the government to take action to protect mining investment here, through improved law enforcement as well as better security conditions. (*)