Saturday, April 09, 2005

Syariah principle on Jamsostek, oops on cronysm

A staunch proponent syariah guy has been appointed as CEO of PT Jamsostek, the holder of monopoly rights of millions of Indonesian worker’s social security insurance and the largest player in Indonesian financial market with Rp33 trillions of assets under its management.

I didn’t realize when state-owned enterprises minister Sugiharto said few days ago that Jamsostek should implement more Syariah principles in its businesses. Hopefully the appointment of Mr Iwan Pontjowinoto is not a mere justification of Sugiharto’s decision.

We have to understand that Mr Pontjowinoto is the chairman of Syariah Economic Society (Masyarakat Ekonomi Syariah) where Sugiharto was one of its board members.
It is not clear what kind of syariah principles to be implemented at Jamsostek by Mr Pontjowinoto, a former managing director of state-owned investment banking company PT Danareksa, clearly not run with syariah principles in his tenure.
Neither is clear whether it means Jamsostek will significantly overhauls its investment portfolios, which are heavily in the stock market and financial market instruments.

But one thing is clear that Iskandar Z Rangkuti also appointed as director of Jamsostek in charge of investment. Rangkuti was former director of PT Bank Syariah Mandiri, a wholly owned subsidiary of state-owned PT Bank Mandiri. Bank Syariah Mandiri is running a bank according to syariah principles.
Before the formal assignment, Rangkuti told the press that he will introduce syariah mission into Jamsostek.

Should this happen, the law on worker’s insurance must be changed. Jamsostek is not only take care of Moslem workers, but other faiths, so by law, Jamsostek is a secular institution regardless of faiths. Should Jamsostek be directed according to syariah principles, there must be another institution for those who don’t want syariah principles, in other words we should strip off Jamsostek’s monopoly.

On the investment side, last year, Jamsostek invested almost 44% of its funds in bank deposits and 43% in bonds, both earning interests, which is not line with syariah principles. Any changes in the portfolio allocation will have significant impact on Indonesian financial market and syariah instruments will boost accordingly.

But since Jamsostek should return the funds to workers, government and board of directors of Jamsostek should ask first the workers whether they accept the syariah principles and its impacts on their investment.

Except that the appointment of new board has nothing to do with the new direction of Jamsostek or just a justification for Mr Sugiharto to put his friends there.
It is nice to expect that the syariah-leaning guys at the helm of Jamsostek will combat the corruptive mentality with syariah principles as well and to put corruptors in jail. That’s syariah.

Other figure, Tjarda Muchtar, appointed as director, is a Golkar (the largest political party in Indonesia) politician and a close friend of Manpower and Transmigration Minister Fahmi Idris. In combination with Mr Pontjo, the board changes, is only confirming the fact that nothing changed in government’s policy regarding SOEs. Forget about merit system. Juts like old days, it is just about political appointees.

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