PT Taspen plans more portfolio investment
JAKARTA (JP): PT Taspen, the state-owned pension provident fund for civil servants and employees of state-owned companies, plans to invest more in equity to help inject fresh life to local stock markets.
Taspen president Muljohardjoko said the company would cooperate with three investment managers to help it invest its funds in equity instruments. He refused to name them.
"So far the capital market is still dominated by foreign investors. Thus, we need to help develop a strong local investor base for our own market," Muljohardjoko
Foreign investors accounted for 60.18 percent of trade on the Jakarta Stock Exchange in 1996, down from 67.03 percent in 1995.
Currently, potential institutional investors like pension funds and insurance firms have been restricted by regulations to invest their funds in stocks. Consequently, they invest most of their funds in less risky instruments like Bank Indonesia Certificates, term deposits and bonds.
Director General for State Enterprises Bacelius Ruru said last month nearly 50 percent of five state-owned insurance companies' investments were in bank deposits.
Ruru said another 36.6 percent was invested in commercial papers, mainly Bank Indonesia Certificates, and the remaining was put in other instruments, including bonds and stocks.
The five social insurance companies are Asabri, Askes, Jasa Rahardja, Jamsostek and Taspen.
Muljohardjoko said that as of last December, Taspen put 26 percent of its pension fund's investment and 17 percent of its life insurance's investment in bonds, stocks and equity participation.
He said Taspen's Dwiguna's life insurance service contributed Rp 808 billion revenue and a net profit of Rp 100 billion last year.
In its pension business the company's premium and investment revenues reached Rp 1.35 trillion last year. Its net asset value rose Rp 519 billion to Rp 6.77 trillion as of the end of last year.
The company has invested quite large amount of money in equity participation in private companies. Its investment in publicly listed stocks might still be marginal, less than 10 percent of its total investments.
Muljohardjoko said Taspen still invested most of its funds in Bank Indonesia Certificates and term deposits.
Bank Indonesia Certificates make up 69 percent of the life insurance division's total investment and 31 percent of the pension fund's investment.
Investment in term deposit makes up 17 percent of the life insurance division's total investments and 36 percent of the pension fund's.
"We plan to reduce our investment in Bank Indonesia Certificates and to invest more in capital market," Muljohardjoko said after installing new executives at his office.
Taspen has just completed an internal restructuring aimed at improving its service and efficiency.
As part of its restructuring, the company reduced its directors from five to four, its bureaus from 13 to 10 and changed the name of the bureaus to divisions and downgraded four provincial offices into main branches.
Taspen's Dwiguna life insurance program has 3.97 million policy holders, all civil servants and employees of state-owned companies.
The company's pension fund provides pension benefits to 1.65 million civil servants and armed forces pensioners. But Taspen provides only 22.5 percent of total pension payments. The remaining 77.5 percent is still funded directly by the state budget.
Until 1993, pension payments were sourced entirely from the state budget.
Minister of Finance Mar'ie Muhammad has said Taspen's share of the pension payments would increase to 25 percent in 1999, 27.50 percent in 2004 and 33.9 percent in 2009. (rid)