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Indonesia: House Approves Law on Futures Trading

(July 25, 2011) On July 19, 2011, Indonesia's House of Representatives, the country's legislative body, passed a new law on futures trading, revising the 1997 Law on Commodity Futures Trade (Act No. 32, 1997). According to Indonesian Trade Minister Mari Elka Pangestu, the revision will help the country comply with plans of the G-20 economic group, which advocates stronger regulation of such trades. Pangestu stated that “the bill, when passed into law, will be a legal instrument allowing more effective supervision over derivative contract transactions, which are now being regulated.” (Erwida Maulia, House Endorses New Law on Futures Trading, THE JAKARTA POST (July 19, 2011).)

Airlangga Hartaro, the head of the House Commission VI, on trade, industry, and investment, said that the revision expands the definition of commodity futures trading, referred to now simply as futures trading. The Law will now cover sharia derivatives, a form of investing consistent with Islamic law, and clearing houses. (Id.) A separate bill was passed that revises a 1996 law on warehouses. (Erwida Maulia, Revised Law on Futures Trading Passed, THE JAKARTA POST (July 20, 2011).)

Pangestu welcomed the new futures trading legislation, stating, “with the signing of this law, we hope that our future [sic] trading will develop and we'll no longer have to refer to other countries to set the prices of our primary commodities.” (Id.)