A friend of mine came to meet me in Jakarta recently after quite sometime haven't meet with each other. Out of curiosity, I enquired the main reason for him to be in Jakarta especially during this financial turmoil. Surprisingly, the response was to evaluate on the possibility of acquiring any insurance companies (life and general) in Indonesia and ultimately to convert into takaful operators. Well, this could be a good opportunity considering the financial crisis which affecting almost everybody in the financial sectors. The price maybe attractive should the companies' NTA drop due to unrealise losses of marketable securities.
However, one interesting issue yet to be resolved was with regard to direct or indirect acquisition of the insurance companies. Direct obviously means an equity in the company whilst indirect is via another non-insurance company. As for direct acquistion, the new foreign shareholder must be an insurance related company or a holding of any insurance company. Besides, the interested party must obtain an A rating from any international rating agency. This is tough for those who had never gone thru such exercise. Moreover, the total foreign holding shall not exceed 80% of the total paid up of the insurance company.
Should indirect holding is a choice there are few critical issues need to be addressed. The target company must fall under the auspices of IMOF otherwise there will be some difficulties in the status of the target insurance company. With indirect holding, the new foreign shareholders may loose their right to place their representatives in the insurance company due to non-JV company status which is known as local company or 'swasta nasional'. Pls refer to PP77 1992 article 4 (1) and (2) which was revised recently, for further details.
