Editorial: Freeport’s IPO Could Ignite Indonesian Stock Exchange

By webadmin on 10:09 am Jul 04, 2012
Category Archive

If Freeport Indonesia, the local unit of the world’s largest copper and gold producer, carries out an initial public offering as was mentioned by its president director, it could spell a bonanza for the Indonesia Stock Exchange and investors.

Furthermore, a public listing would inject greater transparency into the company’s management and oversight, an outcome that could lower the political and social pressure the company comes under from time to time.

But any such move must also benefit the Papuan people and contribute to the economic development of the province. Under the proposed plan, this is not guaranteed.

“We are considering several options, including an IPO,” Rozik Soetjipto, Freeport Indonesia’s president director, said on Tuesday. He noted that the capital market debut would likely boost corporate governance and transparency at the company.

“The IPO would be good, as it tends to be more accountable and transparent,” he added.

The potential size of the public offering would automatically add depth to the local bourse and attract more investors, domestic and foreign. As a major mining company, Freeport Indonesia could also enhance the Indonesia Stock Exchange’s reputation as a global player in the mining sector.

The move, however, will have to win over the public and get the nod from the local government. Ultimately, the parent company, Freeport-McMoRan Copper & Gold, will have the final say on the plan. The IPO is just one option.

Foreign mining companies have a long history in Indonesia and have contributed to the growth and development of the sector. But as the country progresses, there will be increasing public clamor for the Indonesian people to derive greater benefits from the country’s rich natural resources. Listing these companies on the Indonesia Stock Exchange is a viable solution to these needs.