stock exchange nyse

'Promote capital market as funding source'

The Indonesian equity market, despite being huge in capitalization, is still largely untapped as an alternative source of investment, economists said at a seminar on the weekend.

Mohammad Ikhsan, an economist from the University of Indonesia, said the capital market is the ideal financing source for investment at a time when banks are yet to be optimum in extending loans to revive the real sector, but acknowledged that the local capital market was still underdeveloped.

"Most local companies here are reluctant to go public and are notorious for their rough accounting systems, especially the medium-sized ones," he said, adding that the existing taxation system had also discouraged companies from going public.

He said Indonesia would still have to rely on banking credits to boost the real sector, in addition to foreign direct investment.