Convert Jamsostek to Trust Fund

Convert Jamsostek to Trust Fund

Ridwan Max Sijabat
Jakarta

As the government, political parties and elites continue treat
PT Jamsostek, a state-owned company carrying out social security
program for workers, as their cash cow, for the sake of workers,
it will be much better for sake of the workers to change the
current status of the social-security firm to a Trust Fund.
Labor unions have for long time demand the trust fund status for
the company to ensure the safety of the workers' money from being
abused to enrich the elites.

The abrupt reshuffle of the company's management on Monday by
State Minister for State Enterprises Soegiarto proved again it
was urgent to provide better protection for the company.

It looked like a blitz that struck a high tree when the
government reshuffled abruptly the management of PT Jamsostek.The
reshuffle was informed to the old board of directors only two
hours before the inauguration of the new directors on Monday.

The abrupt reshuffle shocked not only the old board of
directors whose term of office was extended for another three
years in December, but also seven labor unions and the Indonesian
Employers's Association (Apindo) which are main stakeholders in
the company.

The reshuffle took place without conducting a fit and proper
test prior to their appointment and most members were hired from
financial institutions and had little knowledge about the social
security programs.

The main issue is that the reshuffle is seemingly based more
on political interests than professionalism and workers'
interests.

Iwan Pontjowinoto, former president of PT Danareksa Pan
Management, was appointed as new president while Iskandar
Rangkuti, former treasury director of Bank Mandiri, and Asep Jaya
Prawira, former director of Permodalan National Madani's venture
capital were appointed as investment director and finance
director respectively.

Only Tri M. Lestari appointed as director of human resources
and general affairs comes from Jamsostek.

The Confederation of All-Indonesian Workers Union (KSPSI) and
the Confederation of Indonesian Prosperous Labor Union (KSBSI)
have expressed their protest of the abrupt reshuffle for fresh
fears that the company's performance would continue decreasing in
the next three years and more invisible hands would interfere in
the company's internal affairs.

There was no clear reason from the government's side about the
reason for the replacement.

Since its establishment in 1978, Jamsostek which was
previously known as DJS and Astek, has never been free from
interference of corrupt government officials. A bigger part of
Jamsostek's assets was invested in ailing companies and banks and
another part was used to finance the handling of problems having
no relations with social security programs.

Just for instances, Jamsostek has been several times defeated
in land cases at court after it purchased troubled spaces in
Jakarta and outskirts, many government officials allegedly used
Jamsostek's funds to strengthen their business emporium in 1990s.
Besides, Jamsostek's assets, mostly consists of pension fund
program that would be returned to workers in time, were used to
finance the repatriation of illegal workers from Middle East in
1995 and to finance the making of a contentious labor law in
1997.

Despite the fall of Soeharto in 1998, Jamsostek still remains
financial sources for certain sides, including ruling parties.
Jamsostek's funds have been used by the government to lift the
credibility of state-owned Bank Mandiri and Bank Rakyat Indonesia
(BRI). The misplacement of Jamsostek's unproportional investment
were revealed following the recent financial scams at BRI and
now-defunct Bank Global International.

Jamsostek carries out health care, death contribution,
occupational accident and pension fund programs for registered 23
million workers nationwide, will remain an object of extortion by
political parties and certain groups unless an internal reform
was conducted within Jamsostek.

To fence Jamsostek from any interference from outside, it is
better to convert the company's status into a non-profit company
or Trust Funds which is directly supervised by the President and
managed by a tripartite board of commissioner representing
workers, employers and the government. And not only workers and
employers but also the government are also required to pay
monthly payroll in their contribution to the social security
programs since it is the government's obligation to provide
protection for workers.

Of almost Rp 34 trillion (US$ 3.5 billion) of Jamsostek's
asset, only Rp 140 billion derived from the government's
contribution while the major part has been collected from workers
taking part in the pension fund program. Jamsostek will be facing
a serious financial problem when it has to return the pension
funds to workers, most of who will enter their mandatory pension
age in the next ten years.

To convert Jamsostek into a non-profit institution, Law No.
3/1992 on social security programs needs to be reviewed to revamp
Jamsostek and its legal status. Law No. 40/2004 on national
social security system also needs to be reviewed since it
regulates that Jamsostek will be merged with social security
programs for civil servants (Taspen and Askes) and for servicemen
(ASABRI).

Both labor unions and Apindo have expressed their objection to
the planned merger because Jamsostek's assets came from either
workers and employers.

The author is a staff writer for The Jakarta Post.