The government has targeted a negative net profit growth for state-owned insurance companies due to new social priorities set for firms.
Secretary to the State SOE Minister Said Didu said Friday that the government had demanded the four biggest state insurance companies no longer place financial performance as top priority.
The State SOE Ministry has published its 2010 outlook on state companies, revealing that state insurance firms, comprising 10 companies, is targeted to reach Rp 4.1 trillion (US$ 446.9 million) in net profit, down by 10 percent from last year's Rp 4.55 trillion.
"In line with the 2004 Social Security System Law, four state insurance companies will focus on public service and their capital expenditure on upgrading service quality instead of seeking more profit," he said.
Said was referring to four companies, comprising PT Asuransi Kesehatan (Askes), PT Jamsostek, PT Asuransi Abri (Asabri) and PT Taspen, that insure workers, active and retired civil servants, as well as active and retired military officers.
The six other state insurance firms that focused in commercial businesses would continue to gather profit, Said said. The six are PT Asuransi Jasa Raharja, PT Asuransi Ekspor Indonesia (Asei), PT Asuransi Jasa Indonesia (Asindo), PT Asuransi Kredit Indonesia (Askrindo), PT Asuransi Jiwasraya and PT Reasuransi Umum Indonesia (RUI).
"The government has launched a number of social policies to improve people welfare. The policies need to be run by state insurers. As social-oriented programs, the products are not for making profit," Said explained.
He cited the Jamkesmas program as an example. The program, which has been run by Askes since 2008, is a government-run health insurance scheme designed for families living in poverty.
"Askes has covered almost 100 million inhabitants across the country," he said.
"However, less profit does not mean less revenue," Said said. "Revenue will increase but capital expenditure will increase higher in order to improve service quality," he said.
Said said that the government estimated 2010's total revenue from state insurers would hit Rp 1,050 trillion, up by 12.9 percent from 2009's Rp 930 trillion.
According to data from the ministry, state insurers plan to spend Rp 620 billion in capital expenditure this year, 56.4 percent higher than Rp 400 billion in 2009.
State insurers' 2010 operational expenditure, meanwhile, is targeted to reach Rp 4.61 trillion, representing 24.5 percent increase from 2009's Rp 3.7 trillion.
Said said that the objective shift on insurance companies would not disturb the hefty profit growth targeted for state enterprises.
Among 18 sectors categorized for 139 state-owned enterprises, only the insurance sector is targeted to gain less profit this year.
Overall, the ministry is targeting state-owned enterprises (SOEs) to boost profit by 21.32 percent this year, higher than 2009's profit growth, which was only 15.17 percent.
Despite the negative profit target, insurance would stay as the sector that contributes the fifth-highest net profit to the total profit target, after energy, banking, telecommunication and mining.
State insurers are targeted to output 4.55 percent of the total Rp 90.12 trillion in SOE profit. (bbs)
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