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tate-owned insurance company PT Jamsostek has one-and-a-half years to transform itself into a non-profit financial institution that will manage labor security programs that cover workplace accident insurance, retirement funds, pension funds and life insurance. The Jakarta Post’s Ridwan Max Sijabat recently interviewed newly appointed president director, Elvyn G. Masassya, to learn more about the transformation. Below are excerpts from the interview.

Question: How do you go about facing intervention from the executive and legislative bodies?
Answer: I am very sorry, but I have to say “no way” to such external interferences from now on. Jamsostek can no longer serve as cash cow for government officials, politicians and political parties. We are committed to rejecting such interference, especially on the eve of the 2014 general election and managing professionally its assets, which have reached Rp 131 trillion (US$13.7 billion). Almost 90 percent of the assets belong to workers and we have signed an integrity pact to maintain good corporate governance.

Many sides have observed that the government steered Jamsostek in its security and portfolio investments. What is your comment?

It is a misleading observation. I was director of Jamsostek’s investment division from 2008 until August 2012, and we have never been told by any government officials or other actors where we have to invest. Jamsostek will receive Rp 7 trillion in assets from workers under the retirement fund program in the remaining three months of this year. So far, its investment volume has reached Rp 123 trillion and a part of it has been placed in security and portfolio investment. We have purchased shares and bonds from state-owned enterprises not because it is ordered by the government but because the publicly listed state-owned enterprises are safer and more prudent for Jamsostek’s long-term investment. Besides, the investment have been closely supervised by an internal committee whose members are all directors.

What is your policy and strategy for improving Jamsostek’s investment gains?

First of all, Jamsostek will continue placing its funds in safe investments. We will purchase blue chip shares of healthy companies and bonds issued by the government and institutionally and financially credible banks. We will also make a direct investment in safe and profitable businesses.

Secondly, we are preparing Jamsostek Incorporated with a number of business units to maximize the investment program. The business units will be established with local and foreign partners and will be both professionally managed and closely supervised. Several units, such as PT Nayaka and PT Bijak, have already begun operating and given annual profits to Jamsostek and workers.

What are you doing in your 100-day working program?

All directors and I are refreshing Jamsostek’s organization and implementing the merit system in filling all strategic positions at all levels in all units. Besides professionalism and performance, integrity will be given greater attention. In giving services to our clients, being smart is not enough and integrity will be given greater priority. Promotions will be based not on echelon or grade but on performance, professionalism and integrity. Those failing to meet the requirements, should go out and look for better jobs outside Jamsostek. I am optimistic the internal organizational changes will proceed smoothly because most Jamsostek employees in the middle and lower layers are educated and even many have finished their post-graduate programs both at home and overseas. We are now inviting young, talented staff to be sent to study social security insurance, capital markets and accountancy overseas.

Additionally, we are preparing crash programs to improve the social welfare of workers and their families. Outlets selling cheaper basic commodities will be available in industrial estates, and labor hospitals and affordable flats will be established in Cakung, Tangerang and Cikarang industrial zones. Jamsostek has already allocated 5 percent of its annual profits to construct affordable flats and to provide mortgages to workers.

How did you learn about the business of social insurance?

I am actually a professional in financial management and investment and I have a lot of experience as a financial executive in Bank Negara Indonesia, Bank Permata, Petrochemical and Jamsostek. I conducted self-directed studies in social insurance and social security and a comparative study on social security implementation in Southeast Asia, the US, Latin America and European countries.

Now, my team and I are learning about any loopholes that may exist in the 2004 national social security system law and the 2011 social security providers law to help minimize problems when the national labor social security programs begin in July 2015. So far, we have identified a great number of potential problems that all stakeholders, mainly the government, have to address before the programs get started.

What are you doing in preparing for the transformation?

We have already made a grand design with our main target of making Jamsostek a world-class social security provider within one-and-a-half years. The transformation in the organizational, infrastructure, IT and human resource matters are still in progress.

While this process is still in progress, the management remains determined to provide maximum benefits for all participants. Besides giving fixed benefits under its four current programs, Jamsostek will intensify the scholarship and housing aid programs and carry out a basic commodity subsidy program to help improve the social welfare of workers and their families. We will also build clinics in 520 regencies and municipalities to help workers and their family access medical services.