Indonesia eases investment rule to aid infrastructure

JAKARTA: Indonesia’s 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 socalled limited participation mutual funds, 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 (RM633.9 million) 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 US$10 billion (RM42.7 billion) in additional inflows, capitalising on Standard & Poor’s May 19 upgrade of the country’s credit ratings to investment grade. – Reuters