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GOOD CORPORATE GOVERNANCE IN SOCIAL SECURITY
ORGANIZATION PT. Jamsostek- Indonesia
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OUTLINE

• THE MORAL CHALLENGE
• BACKGROUND
• CHANGE OF MINDSET
• GOALS OF GCG
• THE GCG FRAMEWORK
• GCG MILESTONES
• GCG STRATEGIC IMPACTS
• CONCLUSION

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THE MORAL CHALLENGE
a. Rationale

• Social security is a human right.
• Article 22 of the Universal Declaration of Human
  Rights states
• Everyone, as a member of society, has the right
  to social security
• The right remains a mere dream for 50 per cent of
  the Indonesian population.
• In the private sectors, only 8 Million workers
  out of 30 Million workers are registered as
  active members in Jamsostek scheme.
• People need to be confident that governments and,
  particularly, Indonesian social security
  organization can provide an adequate level of
  social security.
• A moral challenge for PT. Jamsostek to deal with
  the problem in order to maximize its functions as
  social security organization and to boost its
  coverage.

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b. Why governance?

• Main Challenges in Social Protection (ILO)
• Limited social protection coverage of the
  population
• More than half the worlds population lacks any
  form of social security
• Inadequate level of protection
• Only one in five people has adequate social
  security
• Problems with governance and financial
  sustainability
• Many social security schemes suffer from bad
  governance and are not viable in the long term

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BACKGROUND
a. General Conditions

• Lack of political commitment from the Government.
• Low of law enforcement.
• The authority of law enforcement is still
  embedded on Ministry of Labor.
• Low awareness on the importance of social
  security programs.
• Social security programs are still perceived more
  as a burden of mandatory programs but not as
  basic needs.
• Low public trust to PT. Jamsostek.
• Low administration capacities to deal with
  changes of the business environment
  (technological changes, members preferences,
  etc).

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BACKGROUND
b. Conditions of PT. Jamsostek

• Subject to government regulations, rules
  procedures.
• Legal entity is Limited Liability
• Profit oriented.
• Pay dividend.
• No competitors.
• Increasing demands from the stakeholders.
• High political interventions.

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BACKGROUND
c. Lines of Supervision
Min of Labor
Min of Finance
Min of SOE
Min of Defense
Min of Health
ASKES
TASPEN
ASABRI
JAMSOSTEK
Civil Servants (Pension)
Military and Police
Civil Servants (Health)
Private Workers
Old Age, Work Injury, Death and Healthcare
Old Age, Work Injury, Death and Healthcare
Pension
Healthcare
Technical supervision
Shareholder and Financial supervision
- Representative of Shareholder - Management
Performance supervision
Ministry of State Own Enterprise
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CHANGE OF MINDSET
Result Oriented (Profit)
Process Oriented
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GOALS OF GCG

• Tool to achieve the organization vision and
  missions which prioritizes the shake of all
  stakeholders.
• Increasing the corporate values through the
  improvement of financial performance and
  operational performance based on good business
  practices.
• Guidelines for all Jamsostek employess in doing
  their roles and responsibilities within the
  prevailed rules and ethics based on TARIF
  principles (Tranparancy, Accountability,
  Responsibility, Indepedency, Fairness).
• Function as check and balances process between
  the employees and organization organs (General
  Meeting of the Shareholders, Commissioner,
  Directors).
• Increase the organizations role to its
  environment (Corporate Social Responsibility).

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THE GCG FRAMEWORK
Strategic Plan
Management Resources
Organizational Goals
Output
Information Availability
Public Accountability
Public Resources
I N P U T
O U T P U T
P R O C E S S

• Board Governance
• Composition
• Structure
• Process
• Strategic Planning
• Resources

• Board
• Best Practice of
• GCG
• Code of Conduct
• Standard Operating
• Procedure (ISO Certification)
• Rules and Policies
• Performance Monitoring
• (Balanced Scorecard)

• Financial Reporting
• (Disclosure)
• Non Financial
• Reporting
• Performance Evaluation
• (Key Performance Indicators)

Corporate Governance Principles - T A R I F
Corporate Governance Based Law/External/Interna
l ? Law Enforcement
Framework is a modified model developed by
Syakhroza Akhmad., 2002., Tiga Pondasi Memahami
Corporate Governance., Bisnis Indonesia., 11 Juli
2002, hal 5/1-5.
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GCG MILESTONES

• 2004
• GCG mapping by independent consultant
• Report of GCG mapping
• GCG Guidelines
• Guidelines to the Commissioners and Directors
  (Board Manual)
• Audit Committee Charter
• Investment Committee Charter
• 2005
• Implementation including internal restructuring,
  business process- and sistem operating procedur
  redesigning.
• Follow up of 90 GCG mapping recommendations, such
  as the forming of Risk Manajemen Unit.
• 2006
• GCG assessment by an independent consultant,
  resulting in an achievement score of 80.

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GCG MILESTONES

• 2007
• Legalizing the commitment of the Commissioner and
  Directors for the GCG infrastructurs
• GCG Code
• Code of Conduct
• Organization Values
• Business Ethics
• Integrity Pact
• Board Manual
• Guidelines of Ethical Committee

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GCG STRATEGIC IMPACTS

• Corporate Image

• Awarded as the best Annual Report in the year of
  2006 for non-listed financial organizations as
  one of the manifestations of corporate
  transparency.
• Quality Management Certifications ISO 9001 2000
  for
• 2 Directorates in the Headquarters Investments
  and Operational Services (other directorates
  are still being developed)
• 22 branch offices

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GCG STRATEGIC IMPACTS

• Corporate Performance Indicators

• Important Indicators
• Independent Auditor Opinion Unqualified
  Opinion
• Financial Report as Very Healthy (based on
  Minister of Finance Decree No 826/KMK.013/1992)
• Companys KPI with a score of 106,68
• Average growth of organization indicators
• Membership (employer) 13,69
• Asset 20,23
• Investment Fund 20,27
• Investment Return 15,09
• Profit 14,39

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GCG STRATEGIC IMPACTS

• Reduction of Independent Auditor Findings

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Contd..
GCG STRATEGIC IMPACTS

• Company Performance Improvements

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CONCLUSION

• GCG is a process of continuous improvement to be
  able to overcome bureaucracy problems.
• Good governance gives pressure to the
  organization to add value for all stakeholders
  which resulting in more attention being given to
  efficiency, effectiveness and quality of
  services.
• GCG can be a trigger to increase the value of
  Jamsostek program to its stakeholders.

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THANK YOU