Jamsostek tightens investment control
Ridwan Max Sijabat, The Jakarta Post, Jakarta
PT Jamsostek, a state-owned company that operates most the country's social security programs for workers, has tightened its investment procedure to secure its assets and boost profits in the coming years.
Jamsostek's investment director Samuel Tobing told The Jakarta Post here on Monday that in July this year, his company set up a new standard operating procedure (SOP) to assess all proposals regarding investments in stocks, bond and long-term deposit accounts.
"According to the SOP, all investment proposals have to be assessed by the research and management risk unit before they are passed to the company's investment committee and the board of directors and commissioners for approval," he said.
In its assessment, Samuel explained, the research and risk management unit was required to unveil the potential risks of an investment proposal and make sure that the investments were done in compliance with Law No. 3/1992 on social security programs, Government Regulation No. 28/1996 on Jamsostek's investment procedures and other rulings.
This procedure aims to ensure accountability and transparency in the decision-making process over investment proposals, he said.
Samuel made the statement in response to the results of the Supreme Audit Agency (BPK) audit of the company's 2002 financial performance.
BPK, which described the company's 2002 financial performance as "ordinary without exception", said over the weekend that Jamsostek had weak internal control of investment decisions as evidenced by the fact that not all members of the board of directors were involved in the decision-making process for investments.
Many have alleged irregularities in the investment decisions made by Jamsostek.
Samuel said under the new SOP, all daily deals in the stock market had to have the approval from the investment director while investment allocations, new investments and bond purchases would require approval from the research and risk management unit, investment committee and the boards of directors and commissioners.
"So far, Jamsostek has funds totaling Rp 24 trillion ready for investment and the regulation allows us to invest 10 percent of the asset in numerous sectors, including stock and bond trading, deposit allocations and asset purchase with the minimum gain target of 14 percent, or 2 percent higher than the interest rate of 12 percent of funds collected from workers under the pension program funds," he said.
Jamsostek booked a Rp 982 billion profit in 2002.
Of the company's Rp 24 trillion in assets, Rp 17.9 trillion came from the pension funds collected from more than 22 million workers and 110,726 companies nationwide.
Samuel admitted that Jamsostek had purchased bonds worth Rp 1.2 trillion from many private companies in 2002. The companies include PT Haji Kalla belonging to Coordinating Minister for People's Welfare Jusuf Kalla, PT Sapta Prana Jaya, PT Arutmin Indonesia, PT Volgren Indonesia and PT Suryaindo Pradhana.
He noted however, that Jamsostek had earned Rp 600 billion in coupon and buyback payments from the companies.
Samuel, also former chief operating officer of the Jakarta Initiative Task Force (JITF), said Jamsostek would no longer purchase medium-term notes in the future to lessen possible risks of default because the type of notes was not regulated in the investment regulation being reviewed by the government.
"Medium-term notes are in a gray area because they are not specifically allowed nor prohibited by the existing regulations," he added.
He said that Jamsostek would instead purchase shares of state- owned companies to ensure the safety of the company's investment in the future.
"We just purchased a part of state-owned Bank Mandiri and we have decided to do the same with state-owned BRI's shares," he said.