Expats may opt out of insurance scheme

JAKARTA (JP): More than 47,000 expatriates working in Indonesia will no longer be obliged to participate in the social security program since they have been insured in their respective countries.

Director General of Labor Placement Din Syamsuddin said that the government would no longer enforce the 1995 ministerial decree which makes the social security program compulsory for foreign workers. He said the measure was taken to prevent foreign workers from taking out two insurance programs.

"That is why Minister of Manpower Fahmi Idris recently issued a ruling to lift the ministerial decree," he said Friday.

He also said the minister recently issued another decree to exclude Indonesian workers overseas from the social security program as they would have been insured by local and foreign insurance companies. Bilateral agreements with several host countries require that working Indonesians are insured with companies of the respective countries.

Indonesia receives an average annual remittance of US$35 billion from its one million workers overseas, mainly in the Middle East, Malaysia, South Korea and Japan.

An executive of PT Jamsostek, the state-owned firm that holds the monopoly in social security provision, lamented the decrees, saying the company would lose a considerable sum of money.

Supriyono, the head of the company's Jakarta office, said that around 6,000 expatriates working in Jakarta alone contributed about Rp 2 billion (US$180,000) monthly to Jamsostek.

After symbolically handing over Rp 235 million in pension funds for 41 workers dismissed by mining company Union Texas Limited on Friday, he said Jamsostek had yet to learn the real reasons behind their issuance.

He questioned whether all expatriates working in Indonesia had been insured in their home countries or whether Indonesian workers overseas were really insured with foreign insurance companies.

Supriyono said the decree went against the 1992 social security law which states that companies employing at least 10 workers, regardless of whether they are local or foreign, must pay at least Rp 1 million in social security.

Supriyono said that his company had paid Rp 182 billion to more than 57,000 workers dismissed since the crisis began.

"Jamsostek expects to pay around Rp 350 billion in pension funds to dismissed workers if the economy continues to worsen," he said. He added the company would pay pension funds to more than 3,500 employees dismissed by the national flag carrier Garuda Indonesia.

Ismoe Handoko, a legislator of the ruling Golkar faction, said the government should subsidize an increase in pension funds because it had collected taxes from workers' monthly income.

"A Rp 6 million cash handout is too small for a dismissed worker who has been employed for up to nine years amid the crisis while he or she must support a family with two or three children," said Ismoe, who is on House of Representatives Commission V for labor and mining.

Workers lose 5.7 percent of their monthly wages, which are set aside for their pensions at an interest rate of 11 percent.

The rate is the lowest in Southeast Asia; Singapore sets aside 40 percent, Malaysia 23 percent and the Philippines 8.3 percent. (rms)