Tuesday, March 19, 2024 | 16:33 WIB

Resolution of Jiwasraya issue must be transparent and fair

IO – Since the end of 2018, PT Jiwasraya insurance (Jiwasraya) policy holders have been unable to liquidate their matured policies. Jiwasraya has spectacularly defaulted, and there has been no resolution until now. The Government, as the full owner of Jiwasraya, with a share ownership of 100%, only moves hither and yon awkwardly, without arriving at any real solutions.

Jiwasraya defaulted on its payments not because of usual business risks. They failed not because the economy went down, affecting the performance of Jiwasraya investments and thus caused them great losses. It was the result of mismanagement, violations of the law and corruption. A number of officials were arrested, and others were banned from leaving the country.

Let’s talk about what happened, from the very beginning. First, Jiwasraya JS Saving Plan was offered to the public at the end of 2013. It is similar to a savings deposit product with life insurance bonus – it offers fixed returns for five years, with yields that can be liquidated annually. They promised high returns of 9% or more, or even 13%. In fact, the JS Saving Plan violates common regulations for life insurance products, but many citizens were interested in buying into it. Tens of trillions of Rupiah flowed into Jiwasraya from this one product.

Second, Jiwasraya was pressured to generate high returns, as promised to customers. Speculations were unavoidable: Jiwasraya started to invest in shady deals. These include direct investment placement, repo, money moved to various companies with bad performance. These direct investments were not made professionally, based on careful financial calculations, but purely based on the value of the interest promised. Jiwasraya finally defaulted. Policies that matured at the end of 2018 could not be liquidated. The fate of policy holders remains unknown for the past two years. Some complained to the House of Representatives (Dewan Perwakilan Rakyat – “DPR”), but that was futile.

Policy holders must not become the victims of this mess. They are innocent. The Government, as Jiwasraya’s sole shareholder, must bear full responsibility for the loss, and replace the policy holders’ investments. Yet replacing the loss with funds from other, equally innocent citizens, taxpayers not even aware of the issue in the first place also presents a dilemma. Therefore, everyone involved in the Jiwasraya default must be pursued and interrogated. These include: Representatives of the shareholders, the Board of Directors, the Board of Commissioners, the Financial Services Authority (Otorita Jasa Keuangan – “OJK”) officials that oversee the insurance sector, auditors who review the Company’s finances, investment managers, and Company officers who received Jiwasraya investment placement funds. The guilty must be punished according to applicable rules and regulations – it’s only fair. Members of the public who are stuck with bearing the burden of the bailout will be righteously angry. Fair law enforcement is simply a necessity.

On 31 December 2019, Jiwasraya had an equity (capital) deficit of IDR 33.66 trillion: IDR 19.12 trillion in assets and IDR 52.78 trillion in liabilities. The amount of the deficit continues to swell as time goes by: as of the end of July 2020, the equity deficit was calculated at IDR 38 trillion. The Government planned to restructure Jiwasraya’s liabilities by injecting aid of IDR 22 trillion. This plan is really problematic: On one hand, it’s not fair for the people at large to bear the burden of the mass corruption of Jiwasraya’s officers and their accomplices. On the other hand, it is equally unfair that innocent policy holders would suffer because of this mass corruption. To repeat: No matter what, the Government as a shareholder must be held responsible. Defaulting is partially the shareholders’ fault as well: they have the authority to appoint and replace Directors and Commissioners. General Meetings of Shareholders are held at least once a year, and shareholders should have been aware of actual financial conditions. Shareholders should have been aware that JS Saving Plan is a problematic product that is similar to a Ponzi scheme. Why did they let it stand for years and allow it to cause such great losses? In fact, why not do proper research – why allow it to be created in the first place?

We don’t want this IDR 22 trillion in aid to be misused and stolen again. This bailout fund should be used only to make reparations to policy holders. Furthermore, the reimbursement process must be transparent. The Government must appoint an independent team to administrating payment for matured policies. The DPR must form an independent fact-finding team to find out who was involved in Jiwasraya’s corruption and gratification cases. The law must be upheld. The IDR 22 trillion bailout fund must not be used for operating Jiwasraya or any other insurance holding companies that will be established later. The people have lost their trust in Jiwasraya’s management and in the representatives of its shareholders.

As a State-owned Enterprise (SOE), Jiwasraya will always be a burden to the State and the people. SOE’s capital originates from high-interest national debt that must be covered by the State Budget. At the end of December 2019, 11 out of the 99 SOEs controlled by the Ministry of SOE suffered from capital deficits. These include PT Asabri (IDR 6.1 trillion deficit), PT Dok dan Perkapalan Kodja Bahari (IDR 1.2 trillion deficit), PT Iglas (IDR 1.1 trillion deficit), PT Kertas Kraft Aceh (IDR 1.1 trillion deficit), PT Merpati Nusantara Airlines (IDR 6.4 trillion deficit), and PT PANN (IDR 3.3 trillion deficit).

SOEs do not generate much benefit to the people. On the contrary, SOE monopolies frequently operate to the detriment the people. For example, Pertamina did not lower the price of petroleum fuel when the global price of crude oil dropped. PLN did not lower electricity fees when the price for electricity generator fuels decreased. SOE banks did not lower credit interest rate (properly) when Bank Indonesia’s reference interest rate dipped, when recession haunts Indonesia’s economy. On the contrary, SOE banks set high net interest margins, raising the cost of the economy.

SOEs are further misused by political elites as their ATMs to further their political interests. These elites also abuse authority by distributing offices and projects through SOEs. Therefore, SOEs must be seriously reviewed for the sake of the people. They should exist only in strategic industries as mandated by Article 33 of the Constitution of 1945. Inessential SOEs should be disbanded.

SOCIAL CULTURE

INFRAME

LATEST ARTICLE

POPULAR