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Tuesday, June 15, 2010

Permission for Investment Managers Reopened: Association Asks for Clarification about IDR25 Billion Payable Equity Requirement

Tuesday, 15/06/2010 00:00 WIB
Permission for Investment Managers Reopened: Association Asks for Clarification about IDR25 Billion Payable Equity Requirement

Irvin Avriano A.
Bisnis Indonesia

JAKARTA: The Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) confirms new permissions for securities firms and investment managers will be issued again by July or the third quarter.

Chariman of the Bapepam-LK Ahmad Fuad Rahmany said the permit issuance reopening was related to the revised Minister of Finance 179/010/2003.

"We can issue permits again to investment managers by the third quarter," he informed last weekend.

New permits have been suspended since 2007 to impose order on the high number of investment managers.

In that year, the mutual fund market was resurgent after it slumped in 2005. Therefore, the Bapapem-LK viewed the industry's fundamentals had to be maintained by tightly monitoring investment managers.

The suspension once discouraged several new investment manager candidates, such as Deutsche Group, DBS Group, and Kim Eng Securities.

At the same time, however, several irregularities in the investment management industry had been uncovered, such as the cases of PT Optima Kharya Capital Management and PT Synergi Asset Management.

As of the end of March 2010, Data by the Bapepam-LK recorded there were 99 registered investment managers. In the meantime, the Bapepam-LK's Mutual Fund Data Center recorded only 90 registered investment managers.

In the Minister of Finance draft, one of the important articles is a requirement for a new investment manager to have a payable equity of at least IDR25 billion.

The registered investment managers are given a year to adjust with the new requirement, with IDR15 billion in payable equity to be paid this year.

Vice Chairperson of the Indonesian Mutual Fund Managers Association (Asosiasi Pengelola Reksa Dana Indonesia/APRDI) Bowo Witjaksono Suhardjo hoped the capital market authorities would allow investment managers that could not fulfill the IDR25 billion requirement to merge themselves.

He added another option of selling shares or permits should also be allowed to meet the principle of fairness.

"It is because there has not yet been any clear explanation why the payable equity should be fixed at IDR25 billion. Previously, the requirement only applies to private equity mutual fund."

Bowo viewed there had been an impression that the authority wanted to reduce the number of investment managers in a subtle way.

The new organizers of the association, he continued, also wanted to fight for the segmentation of investment managers based on their activities and payable equity, which was international common, like already practiced by Singapore.

According to Bowo, the requirement had made it difficult for several investment managers interested in the mutual fund industry that had no sufficient capital.

However, Fuad asserted currently there were no regulations limiting investment managers to merge their businesses.

"What is prohibited is if they [investment managers] still have unsettled problems."

Previously, Investment Management Bureau Chief of Bapepam-LK Djoko Hendratto disclosed the capital market authority delayed issuing permits for merger or change of majority shareholders in investment managers due to the suspension period.

In February 2010, the Bapepam-LK revoked the permits of Brahma Capital and Danpac Asset Management (PT Danpac Investama). Earlier this month, the authority also suspended the sale of PT Manulife Aset Manajemen Indonesia mutual fund sold by its holding company, PT Asuransi Jiwa Manulife Indonesia (Manulife Indonesia).

Revoke permit
Separately, the Bapepam-LK yesterday revoked the permits of investment manager, broker, and underwriter PT Eurocapital Peregrine Securities after the case has been processed since 2008.

Based on the explanation on the official website of the capital market, Eurocapital is considered to have violated regulations on repurchase agreement (repo), adjusted net working capital, and undisbursed mutual fund.

The decision of Fuad Rahmany reads that the company violates the Bapepam-LK Regulation V.G.1 on Behaviors Prohibited for Investment Managers, Regulation IV.B.1 on Guide to the Management of Collective Investment Contract Mutual Fund Management, and Regulation V.D.5 on Adjusted Net Working Capital Report.

In addition, the company has also violated Article 27 clause (1), Article 36 (b), 37 (a), and 45 of Law 8/1995 on Capital Market.

The Bapepam-LK found PT Duta Anggada Realty Tbk had made repurchase agreement transaction without the permission of the owner of the collateral shares, Tower Track Ltd, which is the customer of Eurocapital. The share is made as collateral to the Plantation Pension Fund.

In the transaction, the company also bought Duta Anggada stock (coded DART) from Tower Track for the two mutual funds managed by the company, namely Reksa Dana Euro Peregrine Berimbang Plus and Reksa Dana Euro Peregrine Equity.

Due to the transaction and transaction-related actions, the company could not disburse the mutual fund to its customer, Asuransi Jiwasraya.

The company is also found guilty for promising fixed return to its customer, Wahjudi of PT Reasuransi Nasional Indonesia, for its discretionary fund. The product also violates regulations since it isn't placed in an account separated from the company's account.

The case continued since President Director of Eurocapital Jodi Harjanto was in conflict with President Commissioner Rudi Rusli after the Bapepam-LK investigated the case.

Rudi even once alleged several Bapepam-LK officials of receiving money from Jodi to release the president director from legal litigation. (Bisnis/iaa/faa)



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