The Indonesian Listed Companies Association (Asosiasi Emiten Indonesia, or AEI) says the aforementioned revisions are required to achieve the target of seeing 1,000 listed companies on the Indonesia Stock Exchange (from around 530 currently) in the foreseeable future. The initial listing fee is currently set between IDR 25 million and IDR 250 million (approx. between USD $1,850 and $18,500), depending on the value of the company's market capitalization. Meanwhile, the annual listing fee for companies ranges between IDR 50 million and IDR 250 million (approx. between USD $3,700 and $18,500).

Besides the above-mentioned costs, companies also need to pay other costs related to the listing as well as the underwriters, consultants and accountants. After the listing there emerge costs related to annual shareholder meetings, public expose, annual reports, and advertisement in media. All in all, it constitutes a costly affair, particularly for Indonesia's numerous medium-sized companies (and especially if they are located outside the island of Java).

Franky Welirang, Chairman of the AEI, says the Indonesia Stock Exchange and the government need to rethink strategies to encourage local companies to list on the local bourse. After all, more listed companies will boost earnings of the Indonesia Stock Exchange as well as tax revenue for the central government. Meanwhile, for companies there are also important advantages when becoming a listed company.

Advantages for a company to go public:

  • Generate fresh funds that can be used for business expansion or to pay off debt
  • Raise public awareness of the company/adding a new group of potential customers
  • Increase the company's market share
  • Lucrative exit strategy for founding individuals
  • Improved management due to mandatory higher degree of financial and corporate transparency to the public

Disadvantages for a company to go public:

  • Higher costs of complying with regulatory requirements
  • Adjust to a higher degree of financial and corporate transparency
  • "Market pressure" causes companies to focus on short-term instead of long-term growth

The external context also causes companies to be reluctant to conduct an IPO in Indonesia. Indonesia's economy is yet to accelerate significantly (implying purchasing power remains subdued and thus there exists less demand for companies' output), while the global economy remains plagued by uncertainties (including the new US economic and political policies after Donald Trump takes office in January 2017, tightening US monetary policy, and sluggish economic growth in the European Union, China and Japan). In this context companies prefer to sell bonds rather than undertaking an IPO to seek new funds.

Initial Public Offerings (IPOs) in Indonesia:

Year Number of
(per 2 Dec)
2015        15
2014        23
2013        30
2012        22
2011        25
2010        23
2009        13
2008        12

Source: IDX

However, Samsul Hidayat, Director of Corporate Listing at the Indonesia Stock Exchange, disagrees about the high costs involved for listed companies. The initial listing fee between IDR 25-250 million is actually among the lowest in the ASEAN region, he says, and therefore the Indonesia Stock Exchange will not revise this cost. However, the exchange now does provide a 50 percent discount with regard to the annual listing fee (up to 31 March 2017). Three companies that will list soon make use of this discount: (1) Forza Land Indonesia, (2) Prodia Widyahusada, and (3) Bintang Oto Global.

By 2020 the Indonesia Stock Exchange targets to have more than 750 listed companies and an average daily transaction value of IDR 35 trillion.