Indonesia’s regulator eases investment rule to aid infrastructure funding – Reuters

Posted: September 4, 2017 at 4:43 am


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JAKARTA, Sept 4 (Reuters) - Indonesias financial regulator has changed its rules governing investments by non-bank financial institutions, according to a new regulation signed last week, in a move aimed at getting those firms to support government infrastructure projects.

The OJK revised a regulation first implemented in January last year that required insurance companies, pension funds and other non-bank financial institutions to keep a minimum percentage of government bonds in their portfolio to help provide stability to the debt market.

In the revised version, the OJK has expanded the options for required investment products to include instruments issued by state-owned companies and their subsidiaries used to finance government infrastructure projects.

The new list of instruments includes asset-backed securities, as well as the so called limited participation mutual funds (RDPT), according to the regulation signed on Aug. 29, which took effect immediately.

The government is trying to create a market for such instruments. Last week, state-controlled toll road operator PT Jasa Marga sold 2 trillion rupiah of securities backed by the future revenue from one of its toll roads.

Other state-owned firms plan to raise funds in a similar way as part of a presidential drive to secure $10 billion in additional inflows, capitalising on Standard & Poors May 19 upgrade of the countrys credit ratings to investment grade.

Accelerating infrastructure projects is among the main focuses of Indonesias government and project financing is one the main hurdles.

The World Bank estimated that Southeast Asias largest economy would have to spend $500 billion to meet its infrastructure needs in the next five years and public spending alone wouldnt be enough.

The overall amount of government-linked securities the OJK requires non-bank financial institutions must keep as a minimum percentage of their investments remains unchanged from last years rules.

Such securities must make up at least 30 percent of pension funds and life insurance companies investments and 20 percent of general insurance firms investments. (Reporting by Gayatri Suroyo and Fransiska Nangoy; Editing by Sam Holmes)

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Indonesia's regulator eases investment rule to aid infrastructure funding - Reuters

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September 4th, 2017 at 4:43 am

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