Jamsostek ordered to help small firms
JAKARTA (JP): President Soeharto has instructed state-owned social insurance firm PT Jamsostek to allocate Rp 2 trillion (US$588 million) of its investment fund to small firms, and provide an additional $1 trillion for low-cost housing loans.
Minister of Manpower Abdul Latief, accompanied by Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya, said yesterday that Soeharto had instructed them and Minister of Industry and Trade Tunky Ariwibowo to monitor the allocation.
Latief said Jamsostek would receive 14 percent in interest per year from their funds placed in state banks, which would then channel the funds to small firms at 17 percent -- far lower than the market rate of 28 percent now.
"This is a rescue program aimed at salvaging medium- and small-scaled businesses from possible bankruptcy. If these businesses are not saved, unemployment will result," Latief said.
He said his office, together with the Ministry of Cooperatives and Small Enterprises and the Ministry of Industry and Trade, had formed a task force to implement the program.
Small firms that would be prioritized to receive funds would be those in distribution, export-related and labor-intensive businesses, Latief said.
Subiakto said Latief and he would meet again Wednesday, together with executives of state banks and Bank Indonesia officials, to finalize their decision on what mechanism to use to channel the funds.
He reiterated to all parties concerned that they had to make the program successful as it was Soeharto's order.
"The President really cares for the people. Even though he is leaving tomorrow (today), he still called us this morning from his residence on Jl. Cendana to discuss this particular matter," Subiakto said.
Soeharto is scheduled to leave for Namibia today, after which he will travel to South Africa and then Canada to attend the Asia Pacific Economic Cooperation (APEC) summit.
In addition to the Rp 2 trillion for small businesses, Jamsostek was earlier ordered by the President to deposit Rp 1 trillion in state-owned Bank Tabungan Negara (BTN) at a lower than prevailing market rate.
BTN then used the funds for its low-cost housing loans, with interest rates ranging from 20 percent to 22 percent.
Jamsostek president Abdillah Nusi said at a hearing with the House of Representatives Commission V for manpower and trade that he had no choice but to say "Yes, we are ready sir."
Nevertheless, he noted that the insurance firm had distributed its investment funds of some $5 trillion into Bank Indonesia Certificates, certificates of deposit at state banks and private banks, publicly listed stocks and equity in some firms and land.
He did not give a description of the percentage of each investment vehicle, but said Jamsostek had placed a significant amount of funds in private banks, including about Rp 125 billion in five of 16 closed banks.
The five banks were Bank Harapan Sentosa, Bank Andromeda, Astria Raya Bank, Bank Guna Internasional and Bank Kosagraha Semesta.
"We only put our funds in private banks when they had 'healthy' certificates from Bank Indonesia. The five closed banks also had certificates from the central bank when we placed our funds there. So where is Bank Indonesia's accountability?" he said.
In addition, he said Jamsostek invested some Rp 250 billion in the stock market, which carried a potential loss of some Rp 100 billion.
It collected some Rp 1 trillion in premiums last year. It expects to take in Rp 1.6 trillion this year, Rp 1.8 trillion next year and Rp 2.2 trillion in 1999. (09/rid)