Jamsostek to increase bonds in 2004 asset composition

Jamsostek to increase bonds in 2004 asset composition

Sandy Darmosumarto, The Jakarta Post, West Java

State-owned social security firm PT Jamsostek will shift more
of its investable funds in 2004 from deposits and stocks to
government bonds amid declining interest rates and a possible
volatile stock market due to the elections next year.

The company's investment director, Samuel Tobing, told The
Jakarta Post that the company chose to put more money into
government bonds because they carried the least default risk.

He said the firm planned to reduce the portion of its
investment in deposits to 52 percent next year from the current
58 percent.

The portion of investment in bonds will be increased to 35
percent from 30 percent at present. In addition, the portion of
stock investment will be reduced from 21 percent to between 10
percent and 15 percent.

"Deposits will still account for the largest segment of
assets. Of the total amount of bonds, 70 percent will be
government bonds and 30 percent will be corporate bonds," he
commented.

Jamsostek's total assets in the current year reach Rp 25
trillion (US$2.9 billion). Samuel expects this figure to reach Rp
30 trillion next year.

Jamsostek also plans to raise investment in mutual funds to Rp
300 billion next year, from around Rp 200 billion.

"The yield on investment this year is 14.5 percent, higher
than the 14.21 percent target. We hope to reach an investment
profit of Rp 3.4 trillion this year," said Samuel.

He went on to say that next year's yield was projected to
decline to around 10 percent because interest on deposits, the
largest segment of its assets, is expected to decrease to between
6.9 percent and 7 percent.

Company president Achmad Junaidi said that Jamsostek put a
large amount of funds in stocks this year, which is the most
profitable instrument for the company amid the steady rise in the
stock market index.

"Perhaps the rising market momentum will stop once the index
approaches 700 ... The most profitable financial instruments in
2004 will be bonds, followed by stocks," Achmad said.

Another plan of Jamsostek's is to engage in joint ventures, in
which Samuel expects the company will use its land assets to
generate additional funds.

"We will put our land up for sale. However, if the price is
uncompetitive we will engage in joint ventures in which Jamsostek
will provide the plots of land to developers," he said.

Financial director Widjokongko Puspoyo told the Post that the
company's net profit next year was not expected to be more than
the current year's due to declining interest rates.

"We will earn an estimated net profit of around Rp 500 billion
this year, while total revenue is estimated at Rp 2.7 trillion,"
he commented.

Jamsostek funds currently feature in two investigations of
alleged fraud involving state Bank Rakyat Indonesia (BRI). In the
Rp 294 billion and Rp 200 billion fraud cases, funds from
Jamsostek were transferred to accounts belonging to a third
party.

With respect to the Rp 294 billion case, Achmad commented that
only Rp 94 billion of the total was taken from his company's
workers insurance fund (Rp 70 billion) and the firm's welfare
cooperative foundation (Rp 24 billion).