Direct Investment of Pension Funds

To:

1. Management of Employer Pension Funds; and
2. Management of Financial Institution Pension Funds,
   At their respective locations.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 19 /SEOJK.05/2019 CONCERNING DIRECT INVESTMENT OF PENSION FUNDS

In connection with the mandate of Article 8 paragraph (4) of the Financial Services Authority Regulation Number 3/POJK.05/2015 concerning Pension Fund Investments (State Gazette of the Republic of Indonesia Year 2015 Number 82, Supplement to the State Gazette of the Republic of Indonesia Number 5692) as amended by the Financial Services Authority Regulation Number 29/POJK.05/2018 concerning Amendments to the Financial Services Authority Regulation Number 3/POJK.05/2015 concerning Pension Fund Investments (State Gazette of the Republic of Indonesia Year 2018 Number 245, Supplement to the State Gazette of the Republic of Indonesia Number 6276), it is necessary to regulate implementation provisions regarding pension funds that can make direct investments in Indonesia exceeding 15% (fifteen percent) of the total pension fund investments in the Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS
In this Financial Services Authority Circular Letter, the following terms are meant:

1. Pension Fund is a legal entity that manages and runs a program promising pension benefits as referred to in the law concerning Pension Funds.

2. Employer Pension Fund, hereinafter abbreviated as DPPK, is a Pension Fund established by a person or entity that employs employees, as the founder, to implement a defined benefit pension program or a defined contribution pension program, for the benefit of some or all of its employees as participants, and which creates obligations for the employer as referred to in the law concerning Pension Funds.

3. Financial Institution Pension Fund, hereinafter abbreviated as DPLK, is a Pension Fund established by a bank or life insurance company to implement a defined contribution pension program for individuals, whether employees or self-employed workers, separate from the DPPK for employees of the respective bank or life insurance company as referred to in the law concerning Pension Funds.

4. Participant is every person who meets the requirements of the Pension Fund regulations as referred to in the law concerning Pension Funds.

5. Defined Benefit Pension Program, hereinafter abbreviated as PPMP, is a pension program whose benefits are set in the Pension Fund regulations or other pension programs that are not defined contribution pension programs as referred to in the law concerning Pension Funds.

6. Defined Contribution Pension Program, hereinafter abbreviated as PPIP, is a pension program whose contributions are set in the Pension Fund regulations and all contributions and their development results are credited to each participant's account as pension benefits as referred to in the law concerning Pension Funds.

7. Founder is:
   a. a person or entity that establishes a DPPK; b. a bank or life insurance company that establishes a DPLK, as referred to in the law concerning Pension Funds.

8. Supervisory Board is the Supervisory Board of the Pension Fund as referred to in the law concerning Pension Funds.

9. Management is the Management of the Pension Fund as referred to in the law concerning Pension Funds.

10. Acting Management is an official from the DPLK Founder who is assigned to carry out the operational activities of the DPLK.

11. Stock Exchange is a party that organizes and provides a system and/or facilities to bring together buy and sell offers of securities from other parties with the aim of trading securities among them as referred to in the law concerning capital markets.

12. Party is a person or business entity, whether in the form of a legal entity or not, whether individually or together forming a group that has an affiliation relationship.

13. Investee is a limited liability company engaged in financial services where the Pension Fund places its investment.

II. DIRECT INVESTMENT IN INDONESIA

1. Pension Funds making investment placements in the type of direct investment must:
   a. apply the principle of prudence by prioritizing the interests of Participants and/or parties entitled to receive benefits; and b. conduct due diligence on the performance of the Investee before making the investment placement.

2. In conducting due diligence on the performance of the Investee, Pension Funds may use an independent party registered with the Financial Services Authority.

3. Investment placements in the type of direct investment in Indonesia must be made in shares issued by limited liability companies established under Indonesian law, and the said shares are not listed on the Stock Exchange in Indonesia or abroad.

4. Investment placements in the type of direct investment in Indonesia as referred to in item 3 must be intended for long-term investment or for a minimum of 5 (five) years.

5. For Pension Funds implementing pension programs based on Sharia principles, investment placements in the type of direct investment in Indonesia must be placed in Investees that meet Sharia principles.

III. LIMITS ON DIRECT INVESTMENT IN INDONESIA

1. Direct investment in Indonesia is prohibited from exceeding 15% (fifteen percent) of the total Pension Fund investments.

2. Without reducing the provisions as referred to in item 1, Pension Funds may make direct investments in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments with the following provisions:
   a. intended for direct investment placements in the Investee; b. must first obtain approval from the Financial Services Authority; and
   c. at most 25% (twenty-five percent) of the total Pension Fund investments.

3. In the event that direct investment in Indonesia exceeds 15% (fifteen percent) of the total Pension Fund investments due to an increase in the value of direct investments originating from share dividends and/or market value appreciation, it is not included in the investment limit provisions as referred to in item 1.

IV. PROVISIONS FOR DIRECT INVESTMENT IN INDONESIA EXCEEDING THE LIMIT

1. Pension Funds that will make direct investments in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments as referred to in Section III item 2 must meet the following provisions:
   a. direct investment does not significantly lower the health assessment level of the Pension Fund based on comprehensive analysis; b. the direct investment procedure is carried out in accordance with risk management principles;
   c. The Pension Fund is in a condition of fulfilled funds, namely:

1. for Pension Funds implementing PPMP, it is the condition where the Pension Fund's assets for financing are not less than its actuarial present value; or
2. for Pension Funds implementing PPIP, it is the condition where the monthly due contributions have been deposited to the DPPK implementing the PPIP; and
   d. carried out by Pension Funds that already have placements in the Investee in order to add direct investment.

2. Pension Funds that have already made direct investments in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments as referred to in Section III item 2 must have adequate internal control systems. The internal control system aims at least to ensure that:
   a. comprehensive analysis of the development of direct investments carried out is performed; b. documentation and periodic monitoring are conducted; and
   c. appropriate, conservative accounting and valuation procedures using consistent methods are applied.

3. In conducting valuation procedures, Pension Funds may use the services of independent professional appraisers registered with the Financial Services Authority.

V. REQUEST FOR APPROVAL OF DIRECT INVESTMENT IN INDONESIA EXCEEDING THE LIMIT

1. Pension Funds submit a request for approval of direct investment in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments as referred to in Section III item 2 to the Financial Services Authority by attaching documents:
   a. application form for approval to the Financial Services Authority regarding the plan to place direct investment exceeding 15% (fifteen percent) of the total Pension Fund investments as contained in Format I A in Appendix I which is an inseparable part of this Financial Services Authority Circular Letter; b. Pension Fund's consideration for making direct investment exceeding 15% (fifteen percent) of the total Pension Fund investments;
   c. analysis of the Pension Fund's financial condition for the last 3 (three) years and financial projections for the next 5 (five) years, including asset and liability suitability before and after direct investment;
   d. analysis of the Pension Fund's risk profile before and after direct investment; e. existing agreements and/or draft agreements:

1. between Investee shareholders; and/or
2. between the Pension Fund and shareholders of the Investee who sell shares to the Pension Fund;
   f. statement letter from the Management/Acting Management of the Pension Fund stating that the direct investment is carried out for long-term investment or for a minimum of 5 (five) years as contained in Format I B in Appendix I which is an inseparable part of this Financial Services Authority Circular Letter; g. statement letter from the Management/Acting Management of the Pension Fund stating that the Management/Acting Management is responsible for the direct investment placement exceeding 15% (fifteen percent) of the total Pension Fund investments as contained in Format I C in Appendix I which is an inseparable part of this Financial Services Authority Circular Letter. h. Pension Fund's business plan containing the plan for direct investment exceeding 15% (fifteen percent) of Pension Fund investments;
   i. Founder's approval of the Pension Fund for the direct investment plan exceeding 15% (fifteen percent) of Pension Fund investments;
   j. analysis regarding the Investee's business profile, including the support and benefits of the Investee's business on the Pension Fund's performance; k. audited financial reports for the last 3 (three) years and interim quarterly or latest period financial reports, latest ownership and management structure of the Investee;
   l. identity of the majority shareholder or Party controlling the Investee or other parties who will place investments together with the Pension Fund; and
   m. photocopy of the Investee's legal entity establishment deed including the articles of association and any amendments (if any).

2. The Financial Services Authority may request the Pension Fund to:
   a. submit other supporting documents in addition to the requirements as referred to in item 1; and/or b. provide explanations regarding the direct investment plan exceeding the 15% (fifteen percent) limit of the total Pension Fund investments.

3. Pension Funds must submit a statement letter from the Management/Acting Management of the Pension Fund stating that the Management/Acting Management guarantees the truthfulness of the data and information in the documents as referred to in item 1 submitted in the framework of the request for approval of direct investment in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments as contained in Format I D in Appendix I which is an inseparable part of this Financial Services Authority Circular Letter.

4. The Financial Services Authority provides approval or rejection of the request for approval of direct investment in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments no later than 30 (thirty) working days after the request is received as complete and in accordance with statutory regulations.

5. In the event that the submitted request is declared incomplete and/or not in accordance with statutory regulations, the request for approval of direct investment in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments is declared rejected.

6. Pension Funds must realize the plan to place direct investment in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments no later than 6 (six) months from the date the approval for direct investment in Indonesia exceeding 15% (fifteen percent) is given by the Financial Services Authority.

7. In the event that the Pension Fund does not realize the plan to place direct investment in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments as referred to in item 6, the approval for direct investment in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments given by the Financial Services Authority is declared void and invalid.

8. Pension Funds submit a report on the realization of direct investment exceeding 15% (fifteen percent) of the total Pension Fund investments no later than 7 (seven) working days after the direct investment is carried out, containing information at least regarding:
   a. name of the Investee; b. Pension Fund's representative in the Investee's organizational structure;
   c. date of placement, ownership percentage, and total value of placement before and after Financial Services Authority approval;
   d. proof of transaction for share acquisition in the framework of direct investment; e. Pension Fund's ownership structure on the Investee after the Pension Fund carries out direct investment; and f. other documents, as contained in Appendix II which is an inseparable part of this Financial Services Authority Circular Letter.

9. The Financial Services Authority may revoke the approval of the investment placement plan as referred to in item 4 if, before the implementation of the realization of the direct investment placement plan in Indonesia, there are changes that can disturb the continuity of the Pension Fund.

10. The approval letter for the request for direct investment in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments is only valid for 1 (one) placement.

11. Submission of supporting documents as referred to in item 1, item 3, and item 8, is sent to the Financial Services Authority addressed to:

This copy is in accordance with the original
Legal Director 1
Legal Department signed
Yuliana

a. the work unit overseeing Pension Funds
Financial Services Authority u.p. Director of Pension Fund and BPJS Manpower Supervision Wisma Mulia 2 Building, 12th Floor Jalan Jenderal Gatot Subroto Plot 42 Jakarta 12710

b. the work unit overseeing Sharia Pension Funds Financial Services Authority u.p. Director of Sharia IKNB Wisma Mulia 2 Building, 15th Floor Jalan Jenderal Gatot Subroto Plot 42 Jakarta 12710

VI. CLOSING PROVISIONS

The provisions in this Financial Services Authority Circular Letter shall take effect on the date of determination.

Determined in Jakarta on October 25, 2019

EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND
OTHER FINANCIAL SERVICE INSTITUTIONS SUPERVISOR, FINANCIAL SERVICES AUTHORITY, signed RISWINANDI

APPENDIX I
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 19 /SEOJK.05/2019 CONCERNING DIRECT INVESTMENT OF PENSION FUNDS

FORMAT I A
PENSION FUND DIRECT INVESTMENT APPROVAL APPLICATION FORM

DETAILS
Pension Fund Name
Type of Pension Fund
General Register Book Number
Contact person (name, phone, email)
Investee Name
Brief description of Investee

Completeness of Investment Approval Request Documents

REQUIREMENTS | COMPLETENESS/FULFILLMENT | STATEMENT --- | --- | ---

1. Document of Pension Fund's consideration for making direct investment exceeding 15% (fifteen percent) of total Pension Fund investments | YES NO |
2. Analysis of Pension Fund's financial condition for the last 3 (three) years and financial projections for the next 5 (five) years, including asset and liability suitability before and after direct investment | YES NO |
3. Analysis of Pension Fund's risk profile before and after direct investment | YES NO |
4. Existing agreements and/or draft agreements: a. between Investee shareholders; and/or b. between Pension Fund and shareholders of Investee who sell shares to Pension Fund | YES NO |
5. Statement letter from Management/Acting Management of Pension Fund stating that direct investment is carried out for long-term investment or for a minimum of 5 (five) years | YES NO |
6. Statement letter from Management/Acting Management of Pension Fund stating that Management/Acting Management is responsible for direct investment placement exceeding 15% (fifteen percent) of total Pension Fund investments | YES NO |
7. Pension Fund's business plan containing the plan for direct investment exceeding 15% (fifteen percent) of Pension Fund investments | YES NO |
8. Founder's approval of Pension Fund for direct investment plan exceeding 15% (fifteen percent) of Pension Fund investments | YES NO |
9. Analysis regarding Investee's business profile, including support and benefits of Investee's business on Pension Fund's performance | YES NO |
10. Audited financial reports for the last 3 (three) years and interim quarterly or latest period financial reports, latest ownership and management structure of Investee | YES NO |
11. Identity of majority shareholder or Party controlling Investee or other parties who will place investments together with Pension Fund | YES NO |
12. Photocopy of Investee's legal entity establishment deed including articles of association and any amendments (if any) | YES NO |
13. Other supporting documents | YES NO |

We, who sign below, declare that:
The above form has been filled out in accordance with the actual situation and has been completed with documents as referred to in Financial Services Authority Circular Letter Number ...../SEOJK.05/2019 concerning Direct Investment of Pension Funds

Place, Date (day/month/year)
(Title of Management/Acting Management)
(signature)
(Clear Name)

FORMAT I B
STATEMENT LETTER

We, the Management/Acting Management of the Pension Fund, declare that the direct investment carried out is for the purpose of long-term investment or for a minimum of 5 (five) years. If it is later found that the direct investment carried out is not for the purpose of long-term investment or for a minimum of 5 (five) years, we are willing to be held accountable in accordance with statutory regulations.

Place, Date (day/month/year)
(signature)
(Clear Name)
(Title of Management/Acting Management)

This copy is in accordance with the original
Legal Director 1
Legal Department signed
Yuliana

FORMAT I C
STATEMENT LETTER

We, the Management/Acting Management of the Pension Fund, declare that we are responsible for the direct investment placement exceeding 15% (fifteen percent) of the total Pension Fund investments. If later there are problems related to the direct investment placement, we are willing to be held accountable in accordance with statutory regulations.

Place, Date (day/month/year)
(signature)
(Clear Name)
(Title of Management/Acting Management)

This copy is in accordance with the original
Legal Director 1
Legal Department signed
Yuliana

FORMAT I D
STATEMENT LETTER

We, the Management/Acting Management of the Pension Fund, declare that all data and information we submit in the documents for the request for approval of direct investment in Indonesia exceeding 15% (fifteen percent) of the total Pension Fund investments are true data and information and in accordance with the actual conditions of the Pension Fund. If it is later found that there is data or information that is not in accordance with the actual conditions, we are willing to be held accountable in accordance with statutory regulations.

Determined in Jakarta on October 25, 2019

EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND
OTHER FINANCIAL SERVICE INSTITUTIONS SUPERVISOR FINANCIAL SERVICES AUTHORITY, signed RISWINANDI

Place, Date (day/month/year)
(signature)
(Clear Name)
(Title of Management/Acting Management)

APPENDIX II
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 19 /SEOJK.05/2019 CONCERNING DIRECT INVESTMENT OF PENSION FUNDS

FORMAT II
REPORT ON REALIZATION OF DIRECT INVESTMENT EXCEEDING THE LIMIT

REPORT ON REALIZATION OF DIRECT INVESTMENT EXCEEDING THE LIMIT

Pension Fund Name
Type of Pension Fund
General Register Book Number
Contact person (name, phone, email)

Completeness of Investment Realization Documents Realization of Direct Investment Exceeding the Limit

REQUIREMENTS | COMPLETENESS/FULFILLMENT | STATEMENT --- | --- | ---

1. Name of Investee | YES NO |
2. Pension Fund's representative in Investee's organizational structure | YES NO |
3. Date of placement, ownership percentage, and total value of placement before and after Financial Services Authority approval | YES NO |
4. Proof of transaction for share acquisition in the framework of direct investment | YES NO |
5. Pension Fund's ownership structure on Investee after Pension Fund carries out direct investment | YES NO |
6. Other documents | YES NO |

We, who sign below, declare that:
The above Report on Realization of Direct Investment Exceeding the Limit has been filled out in accordance with the actual situation and has been completed with documents as referred to in Financial Services Authority Circular Letter Number ...../SEOJK.05/2019 concerning Direct Investment of Pension Funds

This copy is in accordance with the original
Legal Director 1
Legal Department signed
Yuliana

Place, Date
(day/month/year)
Prepared by,
Title (...........................)
(signature)
(Clear Name)

Acknowledged,
(Title of Management/Acting Management)
(signature)
(Clear Name)

Determined in Jakarta on October 25, 2019

EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND
OTHER FINANCIAL SERVICE INSTITUTIONS SUPERVISOR FINANCIAL SERVICES AUTHORITY, signed RISWINANDI