On January 12 2016 the Financial Services Authority (OJK) promulgated Regulation 1/POJK.05/2016 concerning Investments in the Form of State Commercial Paper for Non-Bank Financial Services Institutions.

Minister of Finance Regulation 53/PMK.010/2012 regarding the Financial Healthiness of Insurance Companies and Reinsurance Companies requires insurers and reinsurers to allocate certain assets in the form of investments. The new regulation requires non-financial institutions to allocate part of the investment in the form of state commercial paper.

Law 24/2002 defines 'state commercial paper' as debt instruments denominated in rupiah or a foreign currency whose interest and principal payment is guaranteed by the government in accordance with their validity period.


The new regulation applies to:

  • life insurers;
  • general insurers and reinsurers;
  • security institutions;
  • pension fund employers;
  • the Manpower Social Security Provider Agency; and
  • the Healthcare Social Security Provider Agency.


The new regulation requires the investment to be conducted in the manner set out below.

Non-bank financial services institutions

State commercial paper investment (minimum requirement)

Investment phase deadlines

Life insurers

30% of the company's investment

  • 20% by December 31 2016
  • 30% by December 31 2017

General insurers and reinsurers

20% of the company's investment

  • 10% by December 31 2016
  • 20% by December 31 2017

Security institutions

20% of the institution's total investment

Pension fund employers

30% of the total pension fund investment

  • 20% by December 31 2016
  • 30% by December 31 2017

Manpower Social Security Provider Agency

  • 50% of the total manpower social security fund investment
  • 30% of the agency's total investment

By December 31 2016

Healthcare Social Security Provider Agency

30% of the agency's total investment

In accordance with Article 2(2) of the new regulation, life insurers' state commercial paper investments will not take into account investments originating from insurance products associated with an investment composition determined by the policyholder or participant.


Failure to comply with the new regulation may result in the imposition of administrative penalties by the OJK in the form of:

  • a written warning;
  • a reappraisal of the fit and proper test for controllers, directors, commissioners or any position equivalent to that of director or commissioner; and
  • prohibitions on becoming shareholders, controllers or members of the board of directors, the board of commissioners, the Sharia supervisory board or any executive board under the board of directors.

The new regulation came into effect on the date of its promulgation.

For further information on this topic please contact Brian Audyanto at Hermawan Juniarto by telephone (+62 21 2995 9057) or email ( The Hermawan Juniarto website can be accessed at

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