ed in all quarters.
Some Indonesian authorities interpreted the move as a way to dodge either the 49% restriction on foreign ownership of listed Indonesian companies, or the direct investment laws governing foreign participation.
Similar concerns applied to the APP and APRIL listings in New York. In late February Bacelius Ruru, chairman of Bapepam (the Capital Markets Supervisory Agency) told Euroweek that he had written to the two companies requesting explanations of their decisions to list only on a foreign exchange.
He believes that, since the holding companies have subsidiaries listed on the JSE, they fall under Bapepam's jurisdiction.
Ruru agrees that the "Indosat listing in New York enhanced the image of the republic, and it showed that there are good companies in Indonesia."
But he refutes the suggestion that Indonesian corporates cannot raise sufficient funds simply by listing on the Jakarta bourse.
It is a view with which many brokers agree--especially those that have attached Rule 144A tranches to domestic IPOs in the past to enable US placement of shares.
One broker adds that, since most Indonesian companies are unlikely to appeal to US retail investors through an NYSE listing, it would be easier to access international institutional investors through the normal channels.
In the better market climate of 1993 and early 1994 several Indonesian companies were able to attract foreign investors through domestic IPOs, many of which were run by international securities firms.
Another sums up the feeling of many non-US houses: "The obvious reason to pitch a New York listing is that none of the US banks have domestic underwriting licenses in Indonesia."
Others argue that, while a listing on a major international exchange may boost the profile and liquidity of a major privatisation stock, it is inappropriate for an existing private sector corporate.
"On the privatisation side, the Indonesian capital markets are not large enough to provide the funds necessary for these flotations," comments David Oxtoby, president-director of Asia Equity Jasereh.
"For companies like Indosat and Telkom this is probably the case. But with some of the companies in the private sector seeking listings, the reality is they could raise the funds at home--and foreigners would find their way to Jakarta--if the offering was attractive."
He continues: "The biggest reason for these overseas listings is that there is a belief among Indonesian business leaders that if they have a significant number of foreign shareholders, then any future Indonesian government will be restrained from doing anything [harmful to their interests].
"Many of the major companies depend on things like forestry concessions that could be taken away with the stroke of a pen. The second reason is ego. The fad this year is to get something listed abroad and they're going to go for it."
Bankers involved with the APRIL deal believe there are logical reasons for not listing in Jakarta: "APRIL eventually will become a regional pulp and paper group," says one.
"It is impossible to list an offshore incorporated company in Indonesia and you can't restructure it into a new company because you need a three-year track record."
That said, bypassing local ownership requirements is probably also a major reason--just as companies and their financial advisers have previously searched for ways to get around other restrictions.
In March last year--in the most
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