Pension funds to invest in infrastructure

Pension funds to invest in infrastructure

The Jakarta Post, Jakarta

Members of the Association of Indonesian Pension Funds (ADPI) are
considering investing some of their funds worth Rp 68 trillion
(US$7.48 billion) for infrastructure projects this year,
according to ADPI Chairman Satino.

Satino said on Wednesday that the investment would be in the
form of capital injections for companies that would be actively
involved in such projects.

"We are considering that direction, but there must be a clear
set of investment instruments such as bonds and stocks," he said
on Wednesday.

Satino added that the investments would likely be allocated
for the purchase of stocks and bonds of companies operating in
sectors related to infrastructure development, such as power,
telecommunications, roads, and others.

Indonesia will need up to $150 billion to finance its massive
infrastructure projects over the next five years. In the first
round, the country has offered 91 projects worth $22.5 billion to
investors through the recent Infrastructure Summit.

Coordinating Minister for the Economy Aburizal Bakrie said
that a second round of offers worth $57.5 billion is scheduled
for November.

Chairman of the government's Infrastructure Financing Team,
Raden Pardede, has said that as a follow-up to the Summit five
infrastructure projects worth $16.8 billion would be officially
offered through open tender in March 2005.

"Pension funds will help finance the infrastructure sector but
how are we going to do this will depend on what (investment)
instruments will be used," Satino said.

"And of course, we will choose the ones that offer the most
benefits to us."

According to the Institute for Development of Economy and
Finance (Indef) -- a Jakarta-based think-tank -- investing in the
infrastructure sector has good prospects as Indonesia will be
allocating a lot of funds for such projects in the future.

"Pension funds can participate through a capital injection to
help finance infrastructure projects," Indef director Aviliani
said at a seminar called Indonesia Market Update 2005 and
Optimization of Pension Fund Portfolio Investments organized by
ADPI and Batavia Prosperindo Aset Manajemen on Wednesday.

However, the instruments for such investment should be set up
first, she said.

"The period of the investment must be more flexible," she
said. "If investment recovery in infrastructure projects usually
takes 15 years, it should now be shortened to five years."

The total value of funds held by ADPI members reached Rp 57
trillion as of the end of 2004, a 19 percent increase on 2003.
The largest portion of pension fund investment was allocated to
state bonds. (003)