Initial Public Offering Procedure in Indonesia
| Indonesia Research Institute Japan

“This post is written by Muhammad Ariq Aswata, Market Research & Business Development at PT Indonesia Research Institute Japan Jakarta, a global management consulting firm on business strategy.”

The process through which a private company goes public by selling its stock to the general public is known as an initial public offering (IPO). It could be a new, young firm or an old corporation that decides to go public by listing on an exchange. After becoming a public company, the corporation can use the capital market to raise more funds, either through a limited general offering to current shareholders, a secondary offering, or a private placement. Attracting strategic investors to invest in the company will be easy.

In order to help the company with the IPO process, the following partners will be needed:

Underwriter, who will assist the company in selling its shares to investors.
Public Accountant, who will examine the financial reports of the company;
Legal Counsel, who will analyze the company’s legal aspects and provide legal advice;
Notary, who will perform amendments to the company’s articles of incorporation, as well as make deeds and agreements;
Appraisal who will determine the value of the company’s fixed assets;
Securities Administration Bureau, who will help company to assist the administration of company’s shares/stocks ownership

The professionals may be chosen by the company based on their track records, reputations, experience and expertise assisting other companies with their initial public offerings, and fees. The company should make certain that the capital market assisting professionals have already registered with OJK. The company needs to hold a general shareholders meeting to get shareholder approval on the plan going public and the size of the shares that will be offered to the public. To transition from a closed limited liability company to a public company (TBK), the company’s articles of incorporation must be amended. If they do not already exist, the company will need to establish a corporate secretary, internal audit, and audit committee. Prior to going public and listing the shares on the Indonesia Stock Exchange, the company must submit a Registration Statement to OJK and a Listing Application to the Indonesia Stock Exchange, both of which must be completed with the following documents:

Company profile, info about the IPO plan, info about the underwriter and supporting professionals;
Legal counsel’s opinion and report on legal assessment;
Financial report that has been audited by a public accountant;
Appraisal report;
The most recent articles of incorporation as a public company, approved by the Indonesian Ministry of Law and Human Rights;
Prospectus;
Financial Projection.

Going Public Process:

Document Preparation and Preliminary Preparation

During the preliminary stage, the company must establish an internal team, appoint external parties to assist it with the IPO process, obtain shareholder approval on the IPO plan and amendment of the articles of association, and prepare the documents to be submitted to the Indonesia Stock Exchange and OJK.

Submission of a Shares Listing Preliminary Agreement Application to IDX

The company must submit to Indonesia Securities Central Custody or Kustodian Sentral Efek Indonesia (KSEI) for the registration of its shares on a collective depository. The Indonesia Stock Exchange will review the application and invite the company, along with the underwriter and capital market supporting professionals, to give a presentation about the company’s profile, business plan, and public offering plan. If all requirements are met, the Indonesia Stock Exchange will grant a preliminary approval known as a Shares Listing Preliminary Agreement within 10 Exchange business days of the documents being completed.

…

OJK Registration Statement Submission

After receiving the Shares Listing Preliminary Agreement from the Indonesia Stock Exchange, the company submits the Registration Document along with its

supporting documents to OJK. The prospectus is the most important supporting document. Period leading up to the publication of the prospectus summary in the newspaper and the book building process, the company must wait for OJK to grant the permission to expose their intention. OJK will issue an accurate statement after the company submits the details concerning the listing price and other required disclosure. After the Registration Statement is declared effective by OJK, the company may publicize the revision/additional info of the prospectus summary in the newspaper, provide the prospectus to the public, and undertake the public offering.

IDX trading, initial public offering, and stock listing

The public offering usually lasts from one to five business days. If investor demand exceeds the amounts of shares available, allotment will be required. After the allotment, the investor’s money for the undone order must be returned (refunded). The shares will be distributed to investors electronically by KSEI.

The company submits a listing application to the Indonesia Stock Exchange, along with supporting documents such as the effective letter of registration statement, prospectus, and shareholder composition report.

The Indonesia Stock Exchange will grant listing permission and announce the listing of the company’s shares as well as the ticker code for trading. When investors trade the company’s shares on the Indonesia Stock Exchange, they will be familiar with the ticker code.

Following the company’s listing on the Indonesia Stock Exchange, investors will be able to trade the company’s stocks with other investors via a brokerage or securities firm registered as an Exchange Member on the Indonesia Stock Exchange.

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Reference

Indonesia Stock Exchange. (2015, December 20). Panduan Go Public. Retrieved from IDX.co.id: https://www.idx.co.id/Portals/0/StaticData/Information/ForCompany/Panduan-Go-Public%20_Dec-2015_English.pdf

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Authored by : Fitri Aulia | 22 December 2020

Recent Property Development

The Covid-19 pandemic has dealt a quite severe blow to the property business sector in 2020. During the PSBB period, business activities were very sluggish and it can be said that some business actors suffered severe losses.

However, entering the new normal period, the economic activity in several sectors including property has begun to revive from the previous period. The role of the government triggers the revival of Indonesia’s property business activities.

Government Stimulus

The assistance provided by the government is in the form of subsidies or incentives for interest subsidies to debtors of public housing credit (KPR), which is contained in the Minister of Finance Regulation (PMK) Number 138 / PMK.05 / 2020 and amendments to PMK 85 / PMK.05 / 2020 regarding the guidelines for providing interest subsidies in the effort to implement the National Economic Recovery program.

In early March 2020, the Government decided to increase the allocation of housing financing assistance by IDR 1.5 trillion for Low-Income Communities (MBR). This was stated by the Director General of Infrastructure Financing of the Ministry of Public Works and Public Housing (PUPR) Eko Djoeli Heripoerwanto in a webinar, Wednesday (29/7/2020).

In addition, the Government also has Bank BTN as their partner-collaboration to implement their OMH Program aimed at Low-Income Communities (MBR) with low interest rates and low installments for the purchase of a prosperous tread house and a welfare apartment.

Bank BTN noted, in 2015 they have provided housing financing assistance totaling 474,099 units. Then in 2016 as many as 595,540 units, in 2017 to 666,806 units, in 2018 to 755,093 units, and in 2019 to 735,749 units.

As of September 2020, BTN has provided home ownership credit support (KPR) of 93,448 units which cost as much as Rp. 15.6 trillion. These support provided by BTN is significant for the survival of the business property sector.

BTN commitment on supporting business property has not slackened. In fact, during the pandemic, BTN continuously provides support for the government program.The distribution of subsidized KPR is still a mainstay of BTN for the One Million Houses program.

Source : Bank BTN (visit : https://www.btn.co.id/id/Conventional/Product-Links/Produk-BTN/Kredit-Konsumer/Pinjaman-Bangunan/KPR-BTN-Subsidi)

Positive Trend in Q3 2020

There is a positive trend during Q3 2020 after it drastically dropped earlier in the year, indicates there is potential for the revival of Commercial Property Demand in Q4 2020 and the next Q1 2021.

Source : Bank Indonesia

Hotels and convention halls are two sectors whose demand has risen quite drastically in the Q3 after falling badly in the previous quarter. This demonstrates positive potential for its development in the future. Meanwhile, the demand of apartment remains low and still struggles to revive until now.

Growth of Commercial Property Demand in Jabodetabek

Overall in Jabodetabek, the commercial property sector also experienced a positive increase during Q3 2020.

In Jakarta, all commercial property demands show positivism with hotels being the most prominent in their development at Q3 2020. After previously shows a negative number, the total index in Q3 has at least increased to be positive.

Source : Bank Indonesia

Meanwhile, the growth in the total commercial property index jumped drastically in Bogor, Depok and Bekasi. Same case with Jakarta, its hotel sector are also the most prominent in reviving, at least in the Q3 2020.

Source : Bank Indonesia

As we can see on charts above, the hotel segment shows a great improvement in demand. This was driven by various kinds of promotions offered by hotels to adapt in this situation such as providing huge discount, staycation packages, working from hotels offer, and wedding reception packages.

Why Hotels?

As Indonesia gradually eases lockdown restrictions, the hotel occupancy rates across the country including Jakarta, have slowly started to pick up. However this is not without several efforts and sacrifices driven by people in the hotels sector to improve and revive the hospitality business sector in Indonesia.

To get through this hard times, efficiency and innovation are the main keys. Therefore, there are several trends created specifically to adapt to this era. Hotels competing with each other to offer a flood of discounts. To further intensify its sales strategy, there are several e-commerce platforms that is becoming a great place to advertise rooms and staycation packages, such as Traveloka. The Buy Now Stay Later also sticks to this trend.

Hotels discounts on Traveloka (Source : Traveloka)

Another new trend is the Work From Hotel (WFH). As you might know, the abbreviation of WFH was initially stands for Work From Home. To connect the dots, Working From Hotel then exist and created because there are more and more office workers are getting bored with the atmosphere of their house and desperate to look for a new atmosphere. It’s a trend where hotels prepare rooms, complete with equipment and facilities to work (e.g : Wi-Fi , stationer, and free printing facilities,etc).

Source : Instagram @harrisfxsudirman and @arunasenggigi

During the transitional PSBB period, indoor wedding receptions are allowed to be held again after previously was banned temporarily due to the massive increase of the Covid-19 spread. This becomes the opportunity that triggers the revival for the hotel business.

However, this permission is also accompanied by the requirement to fulfill and comply with the health protocols made by the government. These includes the limitation of attendees to a maximum of 25 percent of normal capacity. Then, the seating distance for visitors is set at least 1.5 meters. Visitors are also prohibited from passing by or changing seats. The eating and drinking utensils must be sterilized, while the serving of food is prohibited from using a buffet. Last but not least, the wedding staffs are required to wear a mask, face shield and gloves.

One of the breakthrough in this trend was the make of “Virtual Wedding” ever since June 2020. As this was the case held by The Sunan Hotel Solo, which offer a virtual wedding service package for 44.5 million. The event is only attended by the couple and their family members, meanwhile guests are able to attend the wedding virtually through various platforms such as Zoom, YouTube, Facebook and Instagram, while enjoying food sent by the hotel to their residences.

Source: The Sunan Hotels Solo

Finally, we might conclude that the property business in Indonesia has the potential to develop more despite the massive impact it has taken from pandemic outburst. Combining the stakeholders effort and the government’s support to stimulate this sector are expected to help revive the business sector in the future.

References

Bank Indonesia. (2020). Perkembangan Properti Komersial (PPKOM).

Kementerian Pekerjaan Umum dan Perumahan Rakyat. (2020, November 3). Tingkatkan Kepemilikan Hunian Layak, Realisasi Program Sejuta Rumah Hingga Akhir Oktober 2020 Capai 601.637 Unit. Retrieved from https://www.pu.go.id/berita/view/18970/tingkatkan-kepemilikan-hunian-layak-realisasi-program-sejuta-rumah-hingga-akhir-oktober-2020-capai-601-637-unit

Kementerian Pekerjaan Umum dan Perumahan Rakyat . (2020, January 3). Capaian Pembangunan Rumah Tembus 1,25 Juta Unit. Retrieved from https://perumahan.pu.go.id/berita/view/227/capaian-pembangunan-rumah-tembus-1-25-juta-unit

Kompas. (2020, July 29). Alokasi Tambahan Rp 1,5 Triliun untuk Perumahan Terkait 3 Program. Retrieved from https://properti.kompas.com/read/2020/07/29/191334021/alokasi-tambahan-rp-15-triliun-untuk-perumahan-terkait-3-program?page=all

BUMN inc. (2020). Target Penyaluran KPR Bank BTN Naik Menjadi 300.000 Unit Per Tahun. Retrieved from http://bumninc.com/target-penyaluran-kpr-bank-btn-naik-menjadi-300-000-unit-per-tahun/?more=2

Initial Public Offering Procedure in Indonesia | Indonesia Research Institute Japan