In order to ensure more stable investment returns for workers, state-owned workers' savings and insurance company PT Jamsostek will invest more in government bonds this year.

Although, bank deposits would also remain a top priority in the company's investment plans, there would be a significant increase in the company's investment in government bonds, President director Iwan Pontjowinoto said in Jakarta last week.

He said that total investment would be increased by 20 percent to Rp 44.3 trillion (about US$4.6 billion) this year from about Rp 36.8 trillion in the previous year.

About Rp 19.8 billion or about 44 percent of the total investment funds would be allocated for purchasing bonds comprising mostly of treasury bonds, Rp 17.85 trillion or about 40 percent in banks deposits, and Rp 4.6 trillion, or about 10 percent, in equity or stocks and the remaining Rp 2.050 trillion in other investment instruments.

Compared to the previous year, the investment allocation for the bond market rose by about 8 percent from Rp 18.35 trillion in 2005. This year's allocation for bank deposits increased by about 20 percent from Rp 14.75 trillion in the previous year while those for equity rose by more than 15 percent from Rp 4 trillion in the previous year.

Jamsostek invested about Rp 14.1 trillion in bonds, Rp 14.37 in bank deposits, and Rp 3.4 trillion in equity and other instruments in 2004.

"We will allocate more money in bonds, especially in government bonds. Unlike stock or equity, investing in bonds will be much more secure, and more importantly they offer more stable returns," he added.

According to Iwan, the investment returns reached a total of Rp 3.4 trillion in 2005, or about 9.51 percent of the total investment. "The return on investment was bit lower than our target of Rp 9.8 percent," he added.

Iwan said Jamsostek would be extra careful and more conservative in choosing investment options so that massive losses such as those that took place in 2004 could be prevented.

As a result of the Bank Global financial scandal in 2004, the firm suffered about Rp 100 billion in losses due to its investment in bonds issued by the now-defunct bank.

As of Dec. 31, 2005, the firm had registered 1.85 million new members and collected Rp 4.969 trillion in premium income. The firm now has a total of 26.81 million workers participating in the firm's financial services.

Iwan said this year the firm would make new regulations and innovations in order to increase its accountability and the quality of its services so that more workers would take part in Jamsostek's programs such as pension savings and social insurance.

The firm is proposing a permit from the government to form an independent commission comprising of 25 members representing workers, company owners, governmental officials and independent observers.