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).