Indonesian workers have been calling for comprehensive social security for all for some time and the government recently responded by initiating a process to reform the system.
Agung Laksono, Coordinating Minister for People’s Welfare, acknowledges that the current social security system is not comprehensive enough. He says changes set in motion by the Social Security Providers (BPJS) bill, passed in November last year, will deliver improved social protection to Indonesians, pledging: “The reform will revitalize social security in Indonesia.”
Under the changes, social security will be managed by two non-profit, public or-ganizations: Jamsostek
, responsible for workers’ benefits and services, and Askes, the new health agency.
“The reform will revitalize social security in Indonesia.”
Hotbonar Sinaga, President Director of PT Jamsostek
The government will allocate a total of 4 trillion rupiah ($447 million) from the state budget, with 2 trillion rupiah going to support each agency. Employers and employees will finance the system with their contributions, and the government will cover those who are unable to pay the insurance fee.
At present, Jamsostek runs an employee provident fund, employee accident insurance, health benefits and death benefits. By 2015 it will have been divested of its responsibility for health protection, which will pass to Askes, but will take on responsibility for pensions.
Hotbonar Sinaga, President Director of PT Jamsostek, says running the pension program will give the company the opportunity to grow faster and become a bigger organization in terms of the total funds it manages.
“We will be in a position to invest in long-term projects, including infrastructure and so on,” he says. “Of our total investment fund, 90% will be long-term oriented, such as provident funds and pensions. As a result we will have more flexibility to invest.”
Wholly state-owned Jamsostek manages an investment portfolio consisting of approximately 40% in the form of bonds, 30% in time deposits, 20% in equity or stocks, and 3% in mutual funds, with the remainder in direct investment.
“We utilize all these investment vehicles to enable the banks to give loans, to get the real sector moving, so that public-listed companies can expand their business,” says Hotbonar Sinaga.
The company is raising the level of its investment. In 2011, it invested a total of 111.87 trillion rupiah, compared to 98.98 trillion rupiah in 2010. This produced an investment gain of 11.87 trillion rupiah, compared to 11.06 trillion, an increase of 8.8%. In 2012, there are plans to increase the size of the portfolio by 12% to 125.7 trillion rupiah.
Two years ago Jamsostek set up a subsidiary called Jamsostek Investment Company (JIC) to handle its direct investments. The insurer is substantially increasing its investment in real estate and direct placement. Later this year it will launch a new subsidiary, the Indonesia Investment Company (IIC), a business venture with the Islamic Corporation for the Development of the Private Sector (IDC), a subsidiary of the Islamic Development Bank (IDB).
Since becoming President Director in 2007, Hotbonar Sinaga has taken a proactive approach, improving benefits for members by raising service quality. Members enjoy additional benefits, such as cheap apartments built close to industrial complexes.
This year, Jamsostek has plans to cooperate with 20 banks to disburse a 220 billion rupiah fund for a housing deposit program for workers.
“We hope that through our investments jobs will be created and that our total number of members will also increase,” he says. “That is our role in relation with the government – to create jobs, help the poor, create economic growth and protect the environment. Not only do the government and employers trust us, but also the general public as a whole, and being a trusted company is very important for us.”