Pension funds plan to shift investment in bonds<\/p>\n
By Reiner S<\/p>\n
JAKARTA (JP): Local pension funds plan to invest more of their
\nmoney in bonds this year as government bank recapitalization
\nbonds now offer a better yield.<\/p>\n
The investment director of state-owned PT Jamsostek, Andi R.
\nAlamsyah, said that the pension company would boost its
\ninvestment in bonds by more than 200 percent this year to about
\nRp 3 trillion (US$323 million) compared to only Rp 969 billion
\nlast year.<\/p>\n
\"Government bonds are now more attractive than time deposits
\nbecause they offer a better yield,\" Andi told The Jakarta Post on
\nthe sidelines of a hearing late last week of House of
\nRepresentatives Commission IX on finance and the state budget.<\/p>\n
He pointed out that the yield from government bonds would be
\nmore than 18 percent compared to the monthly interest rate of
\ntime deposits of about 14 percent.<\/p>\n
He said that Jamsostek would reduce its investment in bank
\ntime deposits to 70 percent from 80 percent of its total funds.<\/p>\n
Last year, Rp 9.2 trillion in funds were invested in time
\ndeposits, mostly at state banks, while the remainder was invested
\nin stocks and A-rating corporate bonds.<\/p>\n
The finance ministry will soon issue a new ruling to allow
\nlocal pension funds to invest up to 100 percent of their money in
\ngovernment bonds to help activate the trading of the bonds in the
\nsecondary market.<\/p>\n
Currently, pension funds can only invest 20 percent of their
\nmoney in a single bond issue in order to spread the risk. But
\ngovernment bonds are deemed to be a risk-free investment.<\/p>\n
The government has issued about Rp 430 trillion worth of bonds
\nto help finance the country's bank recapitalization program.<\/p>\n
The bonds, which have varying maturity periods, carry a fixed
\ninterest rate of 12 percent and a variable interest rate linked
\nto the interest rate of Bank Indonesia's SBI promissory notes.<\/p>\n
In December last year, the government issued a new ruling
\nallowing banks to exchange part of their fixed rate bonds with
\nstaple bonds, which partly carry a higher interest rate of 16.5
\npercent, to lure investors.<\/p>\n
The amount of money managed by pension funds in 1999 totaled
\nRp 27 trillion. Most was invested in bank time deposits.<\/p>\n
President of another state-owned pension fund company, PT
\nTaspen, Ahmad Subianto also hinted that the firm would invest
\nmore of its money in bonds, particularly government bonds, this
\nyear.<\/p>\n
\"But we'll see what the condition is first. If bonds are
\nreally that good, we'll go for it,\" he said.<\/p>\n
\"We still want to keep at least 50 percent of our money in
\ntime deposits because deposits are more liquid than bonds,\" he
\nadded.<\/p>\n
Ahmad said that Taspen managed around Rp 15 trillion funds
\nlast year, with about 80 percent invested in time deposits.<\/p>\n
Ahmad also suggested that the government eliminate the 0.03
\ntransaction tax to make investment in bonds more attractive.<\/p>\n
Jamsostek's Andi agreed. \"I think the 0.03 percent tax must be
\nremoved to make bonds more attractive.\"<\/p>\n
Director general of financial institutions Darmin Nasution
\nsaid last week that his office was in discussion with the
\ndirectorate general of taxation on whether the transaction tax
\nshould be eliminated.<\/p>\n
According to Andi, investing money in the equity market for
\nthe time being is not so promising due to the high risk.<\/p>\n
\"We'll not buy stock rights now, although some people are
\nrecommending that it's time to buy stocks ... We want to stay out
\nof trouble,\" Andi said.<\/p>\n
Ahmad said that Taspen would not invest in stocks either.<\/p>\n
He said the company planned to divest all of its investment in
\npublicly listed companies as demanded by the finance ministry.<\/p>\n
Taspen has invested in around 12 companies, including publicly
\nlisted firms. The finance ministry has instructed Taspen to
\ndivest the investment.<\/p>\n
One of Taspen's investments is in publicly listed timber giant
\nPT Barito Pacific Timber (BPT). The company has more than 105
\nmillion shares in BPT.<\/p>\n
Ahmad declined to say when Taspen would sell its BPT shares.<\/p>\n
\"We'll only sell when the share price has reached the level at
\nwhich we made the purchase,\" he said.<\/p>\n
Andi also said that Jamsostek would not make direct investment
\nin the near future as such investment in the past was steeped in
\ncorruption, nepotism and collusion.<\/p>\n
\"We'll stop direct investment because its a source of
\ncorruption and nepotism,\" he said, and as an example cited the
\ncompany's investment in retailer PT Sarinah which turned sour.<\/p>\n
Separately, Jamsostek president Djunaidi was quoted by Bisnis
\nIndonesia daily as saying that he would file suit against PT
\nRamako Gerbangmas and Abdul Latif next month if the two failed to
\nsettle their debts with Jamsostek.<\/p>\n
\"If Ramako and Latif fail to pay by the end of this month,
\nwe'll settle it in court,\" he told legislators during a hearing.<\/p>\n
Ramako is a license holder of fast-food chain McDonald's
\nIndonesia, while Latif is a former minister who owns the Sarinah
\nPasar Raya department store.<\/p>",
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