After 2013 the number of IPOs in Indonesia has been declining, particularly as companies are concerned about markets' reaction to looming (further) monetary tightening in the USA and the economic slowdown of China, the world's second-largest economy.

IDX Director Sulistio informed that the IDX targets five types of companies to list in Indonesia in the foreseeable future:

  • Foreign companies; Sulistio said several Singaporean companies have expressed their interest to move to Indonesia as their liquidity in Singapore is not satisfactory
  • Foreign companies that generate 50 percent of their earnings in Indonesia but are currently listed abroad. There are 52 companies selected by the IDX that fall in this category
  • State-owned enterprises (and their subsidiaries); state owned firms play a big role in the Indonesian economy but relatively few are listed. By simplifying procedures to list on the IDX, they might become more eager to go public. Sulistio said there are 14 units of state-owned enterprises expected to list on the IDX in 2017
  • Companies that obtained more than IDR 1 trillion (approx. USD $77 million) in loans from banks. Sulistio explained that when companies borrow from banks they basically borrow from the people who place their funds at banks' deposit and saving accounts. Considering it involves people's money, companies should become more transparent. An IPO would enhance transparency and corporate performance, and
  • Those foreign companies that have been operating in Indonesia for more than five years. Sulistio would like to see at least 20 percent of their shares fall into Indonesian hands.

In 2017 the IDX also targets to see 60 listed companies conducting a rights issue in Indonesia. Amid the improving economy - Indonesia's gross domestic product (GDP) is expected to expand by 5.3 percent (y/y) in 2017, up from an expected 5.0 percent in 2016 - investor appetite for rights issues should increase accordingly.

Meanwhile, average daily transaction value in 2017 is projected to rise to IDR 8 trillion (approx. USD $615 million) from an estimated IDR 6.6 trillion in 2016 on the back of new initiatives, including securities financing.

The IDX also announced it develops the Morgan Stanley Composite Index Indonesia (MSCI Indonesia) for derivatives.

Number of Initial Public Offerings (IPOs) in Indonesia:

Year Number
of IPOs
2008     12
2009     13
2010     23
2011     25
2012     22
2013     30
2014     23
2015     15
2016     12¹

¹ up to 20 October
Source: IDX

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

Number of IPOs in Regional Perspective:

Country       Number of
Listed Companies
Indonesia              537
Singapore              716
Thailand              713
China             2,964
Malaysia              809
Japan             3,531
South Korea              739
USA             6,065

Source: Investor Daily