Jakarta – PT Asuransi Asei Indonesia considers a plan for spin-off of its sharia business unit from the parent company before 2020.
Riduan Simanjuntak, Acting President Director of PT Asuransi Asei Indonesia revealed that the spin-off plan still requires further review. However, his party has set a target for the spin-off to be performed at least in 2020.
The spin-off plan will be realized by taking into account a number of things such as the gaining of tabarru (donation or gift) funds, operational costs, and supporting infrastructure.
“The plan has been made, yet the realization is not set to be this year. We still need to see the performance and the market condition,” Riduan told Bisnis recently.
Based on Law No.40 of 2014 on insurance, an insurance company having a sharia business unit with tabarru funds and an investment fund of at least 50% of the funds held by the parent company, is required to do spin-off by the end of 2024.
Prior to the deadline, the Financial Services Authority (OJK) encourages the acceleration of spin-off of sharia business units to increase the growth of the assets of the sharia industry. As a matter of fact, to date it is rather difficult for the assets of the sharia insurance industry to grow rapidly.
Based on OJK data, the total assets of the sharia insurance industry per February 2017 was recorded at Rp 34.28 trillion. The figures grew slightly compared to the last figures in 2016 which was Rp 33.24 trillion.
Earlier, Edy Setiadi, Deputy Commissioner of Non-Bank Financial Industry of OJK, admitted that the development of the sharia insurance industry has not been significant. He believes that the potential increase of the sharia industry is supported by sharia business units owned by large insurance companies.
“Meanwhile, a large number of sharia business units are of foreign ownership, and the provisions in Law No.40 / 2014 need to be redefined,” Edy added.
Edy thinks that the regulation need to be reinterpreted as it seems that the current understanding is that after a spin-off, a sharia business unit must be wholly owned by domestic investors.
On the other hand, Edy also encouraged parent companies to continue to provide support after spin-off, either in the form of human resources and business mechanisms.
Mochamad Muchlasin, Director of Non-Bank Syariah Finance of OJK, added that insurance companies wishing to perform a spin-off should submit a spin-off roadmap by the end of 2020.
“We are still waiting for the sharia insurance companies to do spin-off. We give them time to make their spin-off roadmap and once they are ready with their roadmap, we will perform an analysis to identify companies that are ready,” he further said.
Pursuant to the Government Regulation No. 39 of 2008, sharia business units are required to meet the minimum capital requirement of Rp 25 billion. When they are separated into entities in the form of full-fledged sharia insurance companies, the minimum capital should be increased to Rp 50 billion. (Bisnis Indonesia / Asteria Desi Kartika Sari)