Jakarta – PT Jamsostek, the state-owned occupational insurance provider, will add Rp 2 trillion (around US$179.5 million) to its annual cash reserves next year to anticipate possible withdrawals by beneficiaries affected by layoffs, which could increase significantly given the global economic downturn.
"Next year, we will add Rp 3 trillion to our annual cash reserves making the total available up to Rp 5 trillion" president director Hotbonar Sinaga said on Wednesday, after a meeting with House of Representative's commission VI on state companies.
Jamsostek collects premiums from workers as savings until they are retired. However, it also covers payments of many kinds of compensation for registered workers in the event of accidents, dismissals and layoffs.
According to Hotbonar, between 2005 and 2007, some 700,000 beneficiaries withdrew funds from the company each year in respect of retirement or layoffs.
However, the amount of beneficiaries withdrawing their funds next year is predicted to increase by 20 percent, Hotbonar said, on estimated massive layoffs in industries suffering from weakening demand because of the global economic crisis.
Business associations for producers of textiles and garments, steel, shoes and fopotwear and others have reported their plans to reduce production on slower demand, which in many cases would be followed up by layoffs.
Hotbonar said the company would remain ready to take additional steps to ensure continuation of its service in paying benefits in respect of workers' rights, should the current cash reserves prove not to be sufficient.
Jamsostek – which also invests part of its funds in bank deposits, the stock market, bonds and other projects – currently boasts around Rp 59 trillion in assets.
At present, it can take a dismissed worker up to six months after submittinmg all the required papers to collect his savings and other compensation from Jamsostek – a period of time considered to be too long especially if the worker would be in dire need of cash because of no longer having a job.
However, Hotbonar said the company was trying to persuade the Manpower Ministry to shorten the period needed to collect the compensation down to just one month.
On the company's plans for next year, Jamsostek would cut its investment allocated to the stock market from 20 to 15 percent – due in part to the drop in its main index, and increase its holdings in much safer investments in bank deposits from 30 up to 35 percent.
Hotbonar earlier in the week said that the value of stocks it held had so far declined by Rp 4 trillion, in line with the recent fall in the stock market's main index. "This is a lesson learned, and that's why the company has decided to reduce its investments in the stock market," he said,
However, until the end of the year, the company still plans to buy some more shares, mostly on blue chips, Hotbonar said, adding that the company had set aside up to Rp 200 billion for that purpose. (dis)