Indonesia’s Financial Services Authority plans to publish scorecards rating companies on the quality of their corporate governance as it begins supervising capital markets in Southeast Asia’s biggest economy.
The agency plans to rate the nation’s 50 biggest listed companies this year, said Muliaman Hadad, chairman of the newly minted regulator known by its Indonesian acronym of OJK. How companies treat minority shareholders and the roles played by board directors are among the criteria, Mr. Hadad said in an interview in Jakarta on Jan. 15. OJK will consolidate supervision of capital markets, banks and non-bank financial institutions.
Mr. Hadad, a former central bank deputy governor, wants companies to improve practices to lure investors and broaden the pool of capital to fund growth. Indonesia’s economic recovery since the Asian financial crisis in 1997-1998, when the nation had to seek an International Monetary Fund bailout, has prompted Fitch Ratings and Moody’s Investors Service to raise their sovereign debt scores to investment grade.
Mr. Hadad said the authority will study the corporate governance scorecards introduced by Thai regulators in the wake of the Asian financial crisis. Indonesia’s stock market is the third largest in Southeast Asia behind Malaysia and Singapore.
“We’d like to see how companies implement sound corporate governance so investors are confident that these companies are in good hands,” Mr. Hadad said. “The top 50 at least should reflect excellent qualities.”
OJK took over the regulatory and supervisory roles of the capital market, insurance, pension fund and financing industries from the Finance Ministry and the ministry’s capital market supervisory agency on Jan. 1, and will assume oversight of lenders from the central bank at the start of next year.