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Social Security

Article - November 28, 2011
From employment and retirement to housing and health, social security is widening its scope
The Indonesian social security programme is constantly being overhauled to make the existing system work better for the beneficiaries and to extend social security coverage to more workers, both in the formal and informal sector.

The current social security system is run by PT Jamsostek (Persero), which was founded in 1977 and is based in Jakarta. It provides protection across four main areas, which include the Employment Accident Insurance Programme (JKK), Death Benefit (JK), Old Age Security (JHT) and Health Care (JPK) for the entire workforce and their families.

‘We have direct programmes targeting the poor, particularly in terms of
health, education
and food’

President Director of
PT Jamsostek
Hotbonar Sinaga, the president director of PT Jamsostek, took the helm in February 2007 and has taken a proactive approach. “Firstly we had to improve benefits for the workers and members by improving the service quality of the organisation,” explains Mr Sinaga. “Also with respect to our financial benefit programme, we worked on increasing returns for our members on profits and funds known as ‘old-age benefits’.

“Furthermore, we provide our members with additional benefits, such as housing, and we build cheap apartments very close to the industrial complexes that are aimed at our members who work in those areas. Our members can rent these apartments and only have to pay 120,000 rupiah (about £8.75) per month and can walk to work.”

According to Dr Armida S. Alisjahbana, the Minister for National Development Planning and chairman of the National Development Planning Agency: “Right now, we have direct programmes targeting the poor, particularly in terms of health, education, food, and so on. We offer health care assistance for those who cannot afford medical treatment. For education, we offer scholarships to children of people from lower income households,” says Dr Alisjahbana. “And with regard to food, we offer rice subsidies for the poor.”
During his tenure, Mr Sinaga also set about creating Jamsostek Investment Company (JIC), a subsidiary of Jamsostek.

“One of the main purposes of the creation of JIC is to participate in equity investment in projects, for example in infrastructure or agriculture. JIC will only invest in equity; it will not be able to give loans for those projects,” says Mr Sinaga. “Once this company grows, JIC will be ready for an initial public offering; selling shares to the public will be our exit strategy. We also want to invite other investors and shareholders from the Middle East in addition to Indonesians to participate in the development of JIC.”