OJK Regulation No. 36/POJK.05/2016 on Amendment to OJK Regulation No. 1/POJK.05/2016 on Government Securities Investment for Non-Bank Financial Institutions

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 36 /POJK.05/2016
CONCERNING
AMENDMENT TO THE FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 1/POJK.05/2016 CONCERNING INVESTMENT IN GOVERNMENT SECURITIES FOR NON-BANK FINANCIAL INSTITUTIONS BY THE GRACE OF GOD ALMIGHTY THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering: a. that in order to broaden the choice of investment instruments for non-bank financial institutions without disregarding aspects of security, suitability with the liability characteristics of non-bank financial institutions, returns obtained, and the role of domestic investors in financing national development, it is necessary to refine the Financial Services Authority Regulation Number 1/POJK.05/2016 concerning Investment in Government Securities for Non-Bank Financial Institutions; b. that based on considerations as referred to in letter a, it is necessary to establish a Financial Services Authority Regulation concerning Amendment to the Financial Services Authority Regulation Number 1/POJK.05/2016 concerning Investment in Government Securities for Non-Bank Financial Institutions;

In view: 1. Law Number 11 of 1992 concerning Pension Funds (State Gazette of the Republic of Indonesia Year 1992 Number 37, Supplement to State Gazette of the Republic of Indonesia Number 3477);
2. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to State Gazette of the Republic of Indonesia Number 5253);
3. Law Number 24 of 2011 concerning Social Security Administrators (State Gazette of the Republic of Indonesia Year 2011 Number 116, Supplement to State Gazette of the Republic of Indonesia Number 5256);
4. Law Number 40 of 2014 concerning Insurance (State Gazette of the Republic of Indonesia Year 2014 Number 337, Supplement to State Gazette of the Republic of Indonesia Number 5618);
5. Financial Services Authority Regulation Number 1/POJK.05/2016 concerning Investment in Government Securities for Non-Bank Financial Institutions (State Gazette of the Republic of Indonesia Year 2016 Number 7, Supplement to State Gazette of the Republic of Indonesia Number 5834);

DECIDING:
To Establish: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING AMENDMENT TO THE FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 1/POJK.05/2016 CONCERNING INVESTMENT IN GOVERNMENT SECURITIES FOR NON-BANK FINANCIAL INSTITUTIONS.

Article I
Several provisions in the OJK Regulation Number 1/POJK.05/2016 concerning Investment in Government Securities for Non-Bank Financial Institutions (State Gazette of the Republic of Indonesia Year 2016 Number 7, Supplement to State Gazette of the Republic of Indonesia Number 5834) are amended as follows:

Inserted between Article 4 and Article 5 is 1 (one) article, namely Article 4A so that it reads as follows:
Article 4A
(1) Non-Bank Financial Institutions may fulfill the minimum placement limit for Government Securities (SBN) as referred to in Article 2 and Article 3 by placing investments in bonds and/or sukuk issued by state-owned enterprises, local government-owned enterprises, and/or subsidiaries of state-owned enterprises, which are used for infrastructure financing. (2) Investments in bonds and/or sukuk issued by state-owned enterprises, local government-owned enterprises, and/or subsidiaries of state-owned enterprises as referred to in paragraph (1) that can be counted towards fulfilling the minimum placement limit for Government Securities are subject to the following provisions:
a. maximum 40% (forty percent) until December 31, 2016; and b. maximum 50% (fifty percent) after December 31, 2016, of the minimum limit required as referred to in Article 2 and Article 3.
(3) Investments in bonds and/or sukuk issued by state-owned enterprises, local government-owned enterprises, and/or subsidiaries of state-owned enterprises as referred to in paragraph (1) and paragraph (2) must be placed in bonds and/or sukuk that are listed on the stock exchange in Indonesia or in the electronic trading platform (ETP) system in Indonesia and have a rating of at least investment grade from a securities rating company recognized by the OJK.

Article II
This OJK Regulation shall come into force on the date of its enactment.
To ensure that everyone knows this, ordering the enactment of this OJK Regulation by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta on November 10, 2016
CHAIRMAN OF THE COMMISSIONERS
FINANCIAL SERVICES AUTHORITY, signature
MULIAMAN D. HADAD
Enacted in Jakarta on November 14, 2016
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signature
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 238 Copy matches the original Legal Director 1 Ministry of Law signature Yuliana

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 36 /POJK.05/2016
CONCERNING
AMENDMENT TO THE FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 1/POJK.05/2016 CONCERNING INVESTMENT IN GOVERNMENT SECURITIES FOR NON-BANK FINANCIAL INSTITUTIONS
I. GENERAL
Financial Services Authority Regulation Number 1/POJK.05/2016 concerning Investment in Government Securities for Non-Bank Financial Institutions serves as the legal basis for the OJK in regulating the obligation of Non-Bank Financial Institutions to make safe investment placements suitable with the long-term liability characteristics of Non-Bank Financial Institutions and encourages the role of domestic investors in financing national development. To further encourage the role of investors in national development and accommodate the dynamics and expectations of Non-Bank Financial Institutions while considering investment limit fulfillment, it is necessary to amend the aforementioned OJK Regulation. The amendment to the aforementioned OJK Regulation involves placing investments in bonds and/or sukuk issued by state-owned enterprises, local government-owned enterprises, and/or subsidiaries of state-owned enterprises, which are used for infrastructure financing, as part of fulfilling the required minimum limits.

In relation to this matter, the OJK establishes the OJK Regulation concerning Amendment to OJK Regulation Number 1/POJK.05/2016 concerning Investment in Government Securities for Non-Bank Financial Institutions.
II. ARTICLE BY ARTICLE
Article I
Article 4A
Paragraph (1)
What is meant by "used for infrastructure financing" is that all or part of its use is for the infrastructure sector, including but not limited to the transportation, energy and electricity, public works, agriculture, plantation, housing, and tourism sectors. What is meant by "state-owned enterprise" is an enterprise whose entire or majority capital is owned by the state through direct participation originating from separated state assets as regulated in Law Number 19 of 2003 concerning State-Owned Enterprises. What is meant by "local government-owned enterprise" is an enterprise whose entire or majority capital is owned by the region as regulated in Law Number 23 of 2014 concerning Regional Government. What is meant by "subsidiary of a state-owned enterprise" is a limited liability company whose majority shares are owned by a state-owned enterprise or a limited liability company controlled by a state-owned enterprise. Paragraph (2) Example calculation of the investment placement limit for life insurance companies and employer-provided pension funds is:

1. at least 20% (twenty percent) of the total investment amount by December 31, 2016, then the maximum amount of bonds and/or sukuk issued by state-owned enterprises, local government-owned enterprises, and/or subsidiaries of state-owned enterprises, which are used for infrastructure financing, is at most 40% (forty percent) of 20% (twenty percent) of the total investment amount or 8% (eight percent) of the total investment amount;
2. at least 30% (thirty percent) of the total investment amount by December 31, 2017, then the maximum amount of bonds and/or sukuk issued by state-owned enterprises, local government-owned enterprises, and/or subsidiaries of state-owned enterprises, which are used for infrastructure financing, is at most 40% (forty percent) of 30% (thirty percent) of the total investment amount or 12% (twelve percent) of the total investment amount.
   Paragraph (3)
   Clearly sufficient.
   Article II
   Clearly sufficient.
   SUPPLEMENT TO STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5947