"The development and growth of the mutual fund industry in Indonesia is expected to be answered by the development of the system in a bid to accelerate faster growth in the industry and make it more efficient," KSEI Director Heri Sunaryadi stated here on Monday.
Cooperation with the KSD was initiated with the signing of a memorandum of understanding (MoU) between KSEI Director Heri Sunaryadi and KSD CEO Jaehoon Yoo and was witnessed by Nurhaida, the Financial Services Authority (OJK) commissioner for capital market supervision, in Nusa Dua, Bali, on Monday.
Heri Sunaryadi argued that the various players in the mutual fund industry such as dealers, investment managers, and custodian banks, including securities companies, are still connected to each other in different ways, with the system developed by the respective actors.
"There are still many manual processes that are executed, and there is an absence of any set standards for interaction between the players. It is an obstacle to develop a viable market for mutual funds since the process becomes inefficient and leads to higher costs," he pointed out.
The condition in Indonesia was similar to that experienced by South Korea a decade ago, when the KSD began building the infrastructure for the mutual fund industry.
"The system connects all the players in the mutual fund industry through an integrated platform. For almost 10 years, the mutual fund industry in South Korea has grown rapidly. The total net asset value (NAV) of mutual funds rose by US$150 billion in mid-2014," he remarked.
Learning from the success of KSD, Sunaryadi Heri revealed that the KSEI could also develop and implement the system in the Indonesian capital market.
The development of the mutual fund industry is in line with the goal of developing the domestic capital market in order to increase liquidity and market depth.
He was of the viewpoint that several current processes are conducted manually and not standardized, which result in high costs.
"In the industry, the problem will be overcome through the development of integrated infrastructure. Thus, there will be a potential for the industry to grow while remaining efficient in terms of cost," he affirmed.
Based on the OJKs data, on September 16, 2014, there were 822 mutual funds with a total of 129 billion units in 75 companies managed by the investment manager. The amount can be further increased through adequate infrastructure and ensuring convenience to the investors.
Nurhaida stated that deepening of the market can be achieved by increasing the number of issuers and products, while the demand can be increased by adding investors, developing infrastructure, and implementing regulations.
"The initiative is in line with the OJKs programs for the development of Single Investor ID (SID) for investors of the mutual fund industry, so that the industry can evolve efficiently and transparently. It then provides confidence to the players and the people who become investors," Nurhaida emphasized.