REPUBLIKA.CO.ID, JAKARTA -- Indonesia's capital market requires more domestic investors as its current number is still small, which is only 0.2 percent of population in Indonesia. CEO of Securities and Exchange Commission in Financial Services Authority (OJK), Nurhaida said that the limited number of domestic investors made Indonesia's capital market very sensitive to foreign investors.

"If foreign investors withdraw their funds, we cannot buffer it without domestic investors," Nurhaida said on Monday.

Domestic investors in Indonesia's Stock Exchange are still around 400 thousand accounts, while 300 thousand accounts in mutual funds.Limited products is also a challenge in capital market development, both in type and quantity. Developing new products in form of stocks, bonds and conventional mutual funds must be conducted. Investors need market, so that size and type of products must be large.

Mutual fund investors are only concentrated in Java, including Jakarta with 45 thousand accounts and West Java with 20 thousand accounts. Number of issuers or listed companies in Indonesia is the least among neighboring countries or only 479 companies, compared to Thailand (577 companies), Malaysia (909 companies), Singapore (782 companies) and India (5,267 companies).

OJK has prepared several programs to answer these challenges, including simplifying provisions of Initial Public Offering (IPO), in order to facilitate the companies, which want to enter capital market. OJK also improved the understanding of capital market to investors. Growing of market capitalization in Indonesia is also good. The figure reached 2,019 trillion IDR in 2009 and grew more than twice to 4,360 trillion IDR in November 2013. 

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