Govt wants to utilize non-bank funds<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
The government wants to tap into the more than Rp 200 trillion
\n(US$21.5 billion) worth of resources that non-banking financial
\ninstitutions (NBFI) in the country manage, to help finance long-
\nterm investments, including major infrastructure projects.<\/p>\n
\"There is currently some Rp 40 trillion in directly available
\nfunds that pension fund managers, life insurance firms and mutual
\nfund managers can use for investments,\" Coordinating Minister for
\nthe Economy Aburizal Bakrie said on Monday, during a two-day
\nworkshop on the development of the country's NBFIs.<\/p>\n
\"This has huge potential that should be developed and
\noptimized for the country.\"<\/p>\n
This potential, Aburizal said, had been largely untapped, with
\nthe country's banking sector still accounting for more than 95
\npercent of financing activity in the country.<\/p>\n
\"More than 98 percent of this is used for short-term
\ninvestments that have a maturity term of less than one year,\" he
\nsaid.<\/p>\n
Aburizal said NBFIs would be encouraged to participate in the
\nfinancing of long-term investment projects, including the
\ngovernment's plans to develop the country's infrastructure during
\nthe next five years.<\/p>\n
\"Such long-term investment projects are also in line with
\ntheir capital portfolios,\" he said.<\/p>\n
The government held an Infrastructure Summit in January,
\noffering 91 major infrastructure projects worth US$22.5 billion,
\nwith another batch of projects worth $57.5 billion to be offered
\nlater this year.<\/p>\n
Of the total $150 billion in financing needs for the projects,
\none-third will be funded by domestic sources including the state
\nbudget, while multilateral lenders are expected to contribute
\nsome $10 billion, leaving global private investors to provide the
\nremaining $90 billion.<\/p>\n
World Bank finance and private sector development coordinator
\nP.S. Srinavas said that pension fund managers and life insurance
\nfirms in the country were estimated to have assets of more than
\nRp 130 trillion, while mutual funds were worth another Rp 100
\ntrillion, money which could be used to fund a more diverse and
\nsound financial sector in the country.<\/p>\n
To encourage NBFI investments, Aburizal said the government
\nwould provide NBFIs with tax breaks and policy incentives.<\/p>\n
\"We will, for example, no longer limit NBFI participation in
\ninvestment projects to a maximum of 10 percent, but will allow
\nthem to participate more than that,\" he said.<\/p>\n
Commenting on the changes, Indonesian Pension Funds
\nAssociation chairman Satino said he hoped the government would
\nguarantee NBFI investments in infrastructure projects.<\/p>\n
\"Many pension fund managers prefer to invest in bonds, rather
\nthan the more risky stocks in companies conducting projects,
\nbecause we are responsible over our customers' funds,\" he said.<\/p>\n
\"If the government wants to encourage more investment from us,
\nthey should at least give some sort of assurance over our
\ninvestments, particularly if the projects are conducted by state-
\nowned enterprises.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-wants-to-utilize-non-bank-funds-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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