JAKARTA, April 11 — Indonesia's US$48 billion (RM212.2 billion) social security fund BPJS Ketenagakerjaan, the country's largest institutional investor, aims to raise the share of local equities in its portfolio to up to 20 per cent within three years, a top official told Reuters today.
Asked about this week's local stock market tumble following the global turmoil caused by United States (US) tariffs, as it had created room for the fund to invest in undervalued shares, said BPJS' director of investment development Edwin Ridwan.
The state-owned fund has been increasing its investment gradually in stocks with big market capitalisation in sectors like banking, telecommunications, commodities, and consumer goods.
"These are the conditions where people are selling; if we look at history ... whenever the market overshoots, people are selling, it is the best time to buy," he said in an interview, referring to the financial crises of 1998 and 2008 and the Covid-19 pandemic.
"The window has started to open up for us to increase our exposure to equities because we need volume, we need liquidity, and with everybody selling, that liquidity is being provided," Edwin said.
The fund was targeting a 13 per cent year-on-year increase in returns in 2025.
BPJS Ketenagakerjaan's current exposure to equities was at around 10 per cent or equivalent to US$4.8 billion (RM21.2 billion), either directly in the stock market or through mutual funds, it said, adding that its target is to expand that to between 15 per cent and 20 per cent within three years. The largest portion is invested in bonds, and the rest is in deposits and other instruments.
Indonesia's stock market tanked when it reopened on Tuesday (April 8) after an extended holiday break, triggering a 30-minute trading halt in response to the global turmoil over US President Donald Trump's tariffs announcement days earlier. The market has since regained some of its losses.
President Prabowo Subianto is looking to increase the state's role in achieving its eight per cent growth target, including via the setting up of a new sovereign wealth fund managing more than US$900 billion (RM3.98 trillion) in assets as well as a state firm to run confiscated palm plantations.
Since the global turmoil hit Indonesian markets, the country has also eased buyback rules for publicly listed companies, including state-run firms, and Bank Indonesia intervened "aggressively" to support a plummeting rupiah.
Asked whether there was any order from the government for BPJS to support the falling stock market, Edwin said the agency was "quite independent."
'Too big for the market'
The agency has been trying for years to get government approval to invest in overseas financial markets, especially equity markets, he said, citing its need to have more options for its large funds.
"Basically we have a very limited universe...so we cannot get in and out easily and we cannot buy when other people buy," Edwin said, referring to the risk of crowding out the market.
The agency's assets under management have been expanding at a rate of 13 per cent to 14 per cent per year, and it receives up to 10 trillion rupiah (RM2.63 billion) per month from premiums paid by members, he said, explaining why it needs to find more investment instruments.
Possible pressure on the rupiah has been one consideration against overseas investment, Edwin said, but he added that foreign exchange supply could be improved via return repatriation.
— Reuters
