One day, I had a short discussion with my brother. We were talking about where to invest our money? Because at that time I really interested in investing my money in Stock Market.
As you know that all we have to do is just putting our money there and it will go up and down depending on the market condition. We will sell our bonds if the price is rising and otherwise, we will buy it when the price is at the lowest point. But then my brother give me a different perspective about where to invest our money. He then asked me,”If you have so much money to spare, why don’t you just build a new factory and employ hundreds of new workers instead of funding the big company (who enlist their company in stock market)?”
Hmmm, at that time I was thinking that he was right. But then when I take a look more deeply about the stock market, there must be a certain purpose why the companies enlist themselves in Stock Market. According to Tjiptono Darmadji and Hendy M. Fakhruddin on their book Pasar Modal di Indonesia, these are the reasons why companies are enlisting themselves to stock market:
- The company can gain relatively enormous fund at that time.
- Go Public cost is relatively cheap
- The process is relatively easy
- Dividend is distributed based on the company’s profit
- Public participation usually excluded with company’s management
- The company is required to be more opened to the public so it could trigger the professionalism in the company
- Giving the public a chance to participate in company’s ownership, so it could reduce social inequality
- Emitent will be more well-known by the public freely
- Giving a chance to cooperative (koperasi) and employee at that company to buy the stock
So, based on the reasons that I had mentioned above, especially the first one, there must be a reason why the companies are collecting the money from society. Perhaps they would like to expand their company but they don’t have enough money to do it and they don’t want to borrow from the bank because they will have to pay the interest regularly to the bank. But different with selling the share from your company. Companies have the right to pay the dividend to the shareholders or not.
Why my brother suggest me to build a factory if you have large amount of money because instead of funding the large company, you can open hundreds new working opportunities by building a factory. Yes this one maybe correct but building a new factory especially for me who don’t have any experience in industrial field before contains so many risks. First I have to know what kind of factory that I want to build. Secondly I have to understand how to distribute my product and the last but not least how can I make the factory can run smooth and efficient.
Yes, if you can build a factory, you can help the government to reduce the unemployment rate which is predicted by the Ministry of National Development Planning (KemBappenas) is dropping from 7.4% to 7.1% in 2011. But if your factory is shut down for unknown reason, you will worsen the Unemployment rate.
But, what will happen if I invest my money in Stock Market and Bonds? Let’s take a look at Semen Gresik’s case.
Semen Gresik (Persero) listed it company in 8 July 1991and now already had 5,931,520,000 shares. Now Semen Gresik Tbk is has a vision to become the leading cement producer in South East Asian Market and Semen Gresik Tbk needs to increase it’s capacity so it has a capability to produce 30 million tons of cement by the year of 2015. To be able to fulfill it vision, PT Semen Gresik needs US$ 3 Billion to increase it’s capacity.
The President Director of Semen Gresik, Dwi Soetjipto said that by building the factories with the average production of 1,5 million tons, Semen Gresik could be the biggest player in South East Asia by the year of 2030.
Just in this year, this company will build two factories with the capacity of 4,5 million tons in Central Java and West Sumatra. Company require US$700 to build those factories. “To build a factory with the capacity of 2.5 million tons only, it requires US$350 Million” said Finance Director Ahyanizzaman.
Dwi Soetjipto continues that in order to gain that large amount of fund, Semen Gresik will look for loan or issued the obligations.
By participating in own a company or by the obligation from the company, you can indirectly build the factory also! You can help government by keeping the employees away from unemployment and you also take part in making Semen Gresik becoming the biggest cement company in South East Asia.
There are around 400s more companies who listed their companies in stock exchange and surely they need your money. How many work opportunities can be created if we fund all of those companies and finally they expand their companies? How many unemployment can be employed?
So, after you read this, have you made up your mind about where to invest your money?