Govt targets pension funds for infrastructure

JAKARTA. Government targets some alternative funding sources to accelerate infrastructure development in 2017. In an ideal manner, government may allocate 5% of Gross Domestic Product (GDP) to fund infrastructure projects.

In Indonesia, the allocation of GDP for infrastructure tends to increase. However, this is still lower than in India and China, which allocate 7% of GDP in 2009 and 11% of GDP in 2005 for infrastructure.

Minister of National Development Planning and the Head of National Development Planning Agency Bambang Brodjonegoro said that one of the alternative funding sources is pension fund. According to Bambang, Workers Social Security Agency (BPJS Ketenagakerjaan) may allocate a maximum of 5% of managed assets for direct investment.

To date, BPJS Ketenagakerjaan manages a total of IDR211 trillion. In other words, government may have potential of IDR10.5 trillion of funds for funding infrastructure projects. Aside of the BPJS’ funds, government may also have potential an IDR140 trillion of additional funds from pension savings (Taspen).

Bambang said that at the first phase, the pension funds may be allocated to fund the construction of Trans Java toll road by increasing the equities of state owned enterprises (SOEs), which involve in the project.

In addition to pension funds, government may also seek loans as an alternative funding source. The Blue Book of Bappenas reveals that Indonesia needs an amount of US$41.4 billion to fund 128 projects under 37 programs. Around 87% or US$36.1 billion of the funds will be allocated for infrastructure projects. Indonesia may obtain a part of loans through its membership in Asian Infrastructure Investment Bank (AIIB).

Head of Communication Division at BPJS Ketenagakerjaan Abul Latif said that BPJS will support the allocation of pension funds for funding infrastructure development. Government Regulation No 99/2013 on the Asset Management of Workers Social Security Agency stipulates that BPJS invest a maximum of 5% of managed assets. “We’ve just allocated 1.5% of the funds in property sector”, he said.

(Muhammad Farid/Translator)