Banks are the major holders of government bonds, with ownership totaling IDR259 trillion as of December 2008, which represents nearly 50% of all government bonds. Other investors include asset-pooling industries (e.g., mutual funds, pension funds, and insurance companies), and private investors.
Domestic financial institutions dominate the debt market. Other investors include mutual funds, pension funds, foreign financial institutions, insurance companies, and individuals. A breakdown of government bond ownership can be found by following the link below.
Generally, there are no restrictions on foreign investors owning Indonesian government or corporate bonds.
Pension Funds
Two types of state funds dominate the pension fund industry in Indonesia: Jamsostek for non-government workers and Taspen for civil servants.
Insurance Companies
Indonesia’s insurance industry is fairly small, but it has been growing steadily since 2000. Insurance companies are important institutional investors in Indonesia’s capital market. In 2008, the insurance industry held about 11% of all tradable government bonds.
Mutual Funds
Indonesia’s managed-fund industry has grown considerably since 2000. However, in 2005 the Capital Market and Financial Institution Supervisory Board (BAPEPAM-LK) issued new regulations requiring fixed-income funds to be valued using a mark-to-market system rather than on a cost–accrual basis. This requirement led to a decrease in the value of fixed-income funds. As a result, investors withdrew significant amounts of money from fixed-income mutual funds, which negatively impacted the market. In October 2005, investment in fixed-income securities with maturities greater than one year was restricted by BAPEPAM-LK.
Fixed-income assets comprised a considerable portion of investment-fund assets prior to 2005. After the near collapse of the industry, BAPEPAM-LK allowed fund managers to introduce protected mutual funds. Protected mutual funds are not risk-free, but they offer a form of guarantee of a return equal to the initial investment.
As of June 2008, the net asset value of mutual funds was at IDR94 trillion.