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State capital injection last resort for Jiwasraya

The State-Owned Enterprises (SOEs) Ministry has emphasized that a capital injection into state-owned PT Asuransi Jiwasraya would be a last resort in the government's efforts to rescue the ailing insurance company

Riska Rahman (The Jakarta Post)
Jakarta
Thu, February 27, 2020

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State capital injection last resort for Jiwasraya

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span>The State-Owned Enterprises (SOEs) Ministry has emphasized that a capital injection into state-owned PT Asuransi Jiwasraya would be a last resort in the government's efforts to rescue the ailing insurance company.

The ministry and House of Representatives were discussing several other scenarios to save the insurer from bankruptcy and help it pay its policyholders’ claims, Arya Sinulingga, an aide to SOEs Minister Erick Thohir, said on Tuesday.

“The ministry is still devising a plan to save Jiwasraya with a comprehensive plan to improve its fundamentals,” he said in a statement.

Erick also underlined that talks of a state capital injection were meant to help state-owned insurers in general and not just Jiwasraya, as the SOEs Ministry aimed to improve the country’s insurance industry's health in the long run.

“We also have to make sure that Jiwasraya’s case does not happen again.”

Jiwasraya failed to pay matured policies worth Rp 16 trillion (US$1.17 billion) as of January as a result of alleged investment mismanagement.

The Attorney General's Office (AGO) has opened an investigation into the insurer, named a suspect and detained five individuals in the case, including former Jiwasraya executives and two businesspeople.

Finance Minister Sri Mulyani Indrawati conceded on Wednesday that several options were still being considered.

“We’ll see the final proposal, including all possible [effects],” she said. “If there must be an intervention by ultimate shareholders [the government], it will be incorporated in the state budget.”

Sri Mulyani acknowledged that such an allocation was not available in this year’s state budget.

“If it is allocated in 2021, the budget will be submitted to [the House] so that we’ll have a better understanding of what went wrong and how to solve it.”

Speaking about the matter last year, she said the government would not bail out the insurer.

On a separate occasion, Erick said the ministry would continue to promote a business-to-business solution to help Jiwasraya so that it could pay its claims. However, he did not deny that the insurer would need a state capital injection.

“We can’t reveal how much. It will depend on how long it takes to pay the claims,” he said after meeting with President Joko “Jokowi” Widodo in Jakarta.

Meanwhile, Aria Bima, chairman of the House Commission VI overseeing SOEs, trade and industry, said on Tuesday that the working committee handling the Jiwasraya case was expected to reach a decision on a rescue scheme by mid-March.

“We then expect Jiwasraya to start paying its claims by the end of March,” he said after meeting with the insurer and the SOEs Ministry in Jakarta.

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