During the first opening of Jakarta Stock Exchange (JSX) for the year 2006, Vice President Jusuf Kalla envisaged that in the future, JSX would be more capable of depicting the actual economy of Indonesia. Using a witty illustration, he pointed … out that should the indicator of JSX pointed to positive sentiments, then, this should be reflective towards the real sector, as inclusive of the traditional markets such as the Senen market, Klewer market as well as the other markets spreading from Sabang to Merauke.

Taking both the statement and the illustration into account, we can read into the hope for the capital market to support the economy of the real sector, yet at the same time, it highlights the perception of detachment between the capital market and the real sector all this while. Hence, what must be done to realize IndonesiaÂ’s capital market as a true and accurate reflection of IndonesiaÂ’s economy as a whole to function as a barometer in attracting investments to boost the real sector?

The purpose of this simple writing is to identify a number of agenda to strengthen the capital market so as to contribute more towards the revival of IndonesiaÂ’s economy.

Like other financial institutions, the capital market is an institution of trust. Public investors, being the fund owners, are willing to invest through the capital market because they trust in its mechanism to protect their interest and yield adequate return for their investment. Based on such public trust, the Jakarta Stock Exchange, as the operator of IndonesiaÂ’s capital market, is dedicated to ensure the implementation of good governance.

Under the regulatory instruments and watchful supervision, the quality practice of governance in the capital market certainly will influence the investment climate in Indonesia. Recalling that the capital market is an institution of trust, consequently, the aspects of transparency and accountability become paramount. Both transparency and accountability are directly related towards the credibility of the market, resulting in the relevancy and effectiveness of regulations, mechanism as well as the enforcement of penalty.

The deficiency of transparency and accountability, which resulted in doubt to the credibility of the organizer, will cause regulation to be defective. Conversely, an effective regulation and supervision will build a firm foundation of trust from the public investors.The stigma of which the capital market is purely based on speculations must be eradicated by building trust and credibility as the mean of investment.

An effective regulation that helps to reduce speculations will create an efficient market, whereby the rise and fall of share prices are not full of surprises but supported by strong fundamental based instead, may it be from the company side (systematic risks) or the macro economic environment (unsystematic risks) in general. Consequently, under such circumstance, events in the capital market will also have repercussion towards the real sector, such as the traditional retailers in the Klewer market or Senen market.

If such is the case, can we draw a conclusion that todayÂ’s capital market is still inefficient? During that opportunity, the Vice President also pointed out that the present condition of the capital market is considered normal, where no major fluctuation takes place. Nonetheless, no correlation is yet evidence with the development of the national economy, as in the real sector. In spite of this, when compared to the 1990s, IndonesiaÂ’s capital market has indeed achieved much advancement. Particularly due to the number of lessons learned from the economic crisis suffered at the end of the 1990s.

Undoubtedly, the future agenda constitutes the building of trust as a fundamental aspect by improving market integrity through strengthening of various regulations, enforcement of rules, and the implementation of good governance; both in terms of good public governance as well as good corporate governance. Only this way, could the hope of Vice President Jusuf Kalla for the capital market to boost the real sector economy, be realized.