Fri, 03 Dec 1999

Government mulls altering Jamsostek's status

JAKARTA (JP): The government is considering to change the status of state-owned social insurance company PT Jamsostek into a non-profit organization as part a reform program in the country's social security system, Minister of Manpower Bomer Pasaribu said on Thursday.

Bomer said the change was needed to ensure that all the money raised by the insurance company was used for the welfare of the workers.

A non-profit organization would benefit workers more compared to its present status as a limited liability company, the minister said, adding that running a business entity to manage workers' security funds was unwise.

"It's common throughout the world to have a trustee handling social security funds," Bomer said on the sidelines of a seminar about reforms in social security, the insurance industry and pension funds, organized by the Indonesian Chamber of Commerce and industry.

He said since Jamsostek was wholly owned by the government, workers and business organizations had little control over how the company managed their funds.

Bomer said under Jamsostek's present status, the government had little accountability toward the owners of the funds.

"While the accountability of a trustee is toward its owners," he added.

The institution which would replace Jamsostek would still collect premiums from workers but the funds would be managed by professionals.

At present, all companies in the country must insure their workers with Jamsostek, which provides not only insurance packages but also offers saving schemes.

Bomer said State Minister of Investment and Enterprises Empowerment Laksamana Sukardi shared his view and that both sought to meet Finance Minister Bambang Sudibyo for further discussions.

Bomer said the idea had also gained support from the International Labor Organization (ILO) and he awaited further talks between related ministries by the end of the year.

Meanwhile, advisor to the Indonesian Association of Pension Funds, Kadarisman, said that since Jamsostek was a limited liability company, it must comply with all the stipulations of corporate law.

"As a limited liability company, Jamsostek should generate profits, pay dividends to shareholders and pay taxes to the government," Kadarisman said.

If the status of Jamsostek was changed, it would no longer be obliged to pay dividends or taxes to the government, he said.

"So no money should come out except for payments to workers," he said.

According to him, Indonesia was the only country to have a limited liability company managing social security funds.

He also called on the government to subsidize Jamsostek in times of difficulty as providing social security was part of a government's responsibility.

Jamsostek president, Ackmal Husin, in his paper suggested that the company should become an independent agency with special authority to ensure all companies in the country join its social security programs.

Ackmal cited similar organizations in the Philippines and Malaysia have such an authority allowing them to impose a penalty on companies refusing to join their programs.

He said Jamsostek should report to the president, but under the supervision of a tripartite agency consisting of representatives of workers, employers and experts of social security.

Insurance expert Indra Hattari said social security funds should be handled by a non-profit agency who would place the funds in long term government bonds.

He said a council of ministers encompassing those of manpower, health, social, finance and the governor of Bank Indonesia, should supervise the agency.

Indra stipulated that the government should fully utilize the social insurance system as an instrument to collect funds for long term investments. (03)