Jamsostek to invest Rp 4t in equity

Rendi A. Witular, The Jakarta Post, Jakarta

State-owned social security firm PT Jamsostek plans to invest at least Rp 4 trillion (US$399.2 million) in the equity market next year, in a bid to aggressively tap higher yields from its investments.

Jamsostek president director Iwan Pontjowinoto told The Jakarta Post recently that the equity investment would make up some 10 percent of the company's total investments, which are estimated to reach Rp 40 trillion.

"If the market condition is conducive, we may raise our equity investment drastically to meet our investment proceeds target of Rp 4 trillion," he said.

The company's allocation for equity investment for next year is similar to this year's amount.

With such a huge amount of funds under its management, Jamsostek is the only local institutional investor that is capable of acting as a key mover of the stock market, with most other movers being foreign-based investment banks and securities houses.

"Investment in the equity market promises a higher return than any investment instruments. However, the risk exposure is greater. For sure, we will not invest for speculative reasons," said Iwan.

Iwan also said that aside from the 10 percent investment in equity, Jamsostek had also planned to allocate around 50 percent of its investments for bonds, 30 percent for bank deposits and the remaining 10 percent for mutual funds and non-moving assets.

Jamsostek invested Rp 14.1 trillion in bonds, Rp 14.37 trillion in bank deposits and Rp 3.44 trillion in stocks, mutual funds and other securities in 2004.

"We prefer to expand our investment in bonds, especially those issued by the government, because the instrument is more sound, more stable and promises higher return," he said.

Last year, Jamsostek lost a Rp 100 billion investment in bonds issued by the now-defunct Bank Global. The government's blanket guarantee scheme apparently did not cover sub-debt bonds and mutual funds.

As of the first nine months of this year, Jamsostek has some Rp 15 trillion investment portfolio in government bonds.

Iwan said the company's decision to expand the bond investment was attributable to a decline in the interest proceeds from bank deposits during the first six months of this year, forcing the firm to lower its investment yield from around Rp 3.6 trillion to Rp 3.03 trillion.

The company is targeting an investment return of an average of 9.88 percent annually for each participating worker, up from an average of 8.5 percent last year.

Of the country's 90 million-strong work force, 24 million have been registered with Jamsostek, and only 7.5 million have remained active in paying their monthly insurance premiums to the firm.

The company estimates that its investible funds for this year will increase to Rp 36.2 trillion from Rp 31.8 trillion last year. As of the first six months of this year, the investable funds had reached some Rp 34.2 trillion.