PT Taspen plans more portfolio investment

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)