Millennials Who Are Starting To Become Literate In Investing By Buying Government Securities SBR009

Millennial generation. (Photo: Ministry of Finance)

JAKARTA - The Director General of Financing and Risk Management (Dirjen PPR) of the Minister of Finance has determined the proceeds from the sale of Retail Savings Bond (SBR) series SBR009. The SBR009 is the first retail Government Securities (SBN) to be issued in 2020.

Quoted from the official statement of the Director General of PPR, it was stated that the total volume of the SBR009 purchase order that had been determined was IDR 2,255,246,000,000.00 (two trillion two hundred fifty-five billion two hundred and forty-six million rupiah). The proceeds from the sale of SBR009 will be used to fulfill part of the financing needs of the 2020 State Budget, including to improve the quality of Indonesia's human resources.

SBR009 sales managed to exceed the indicative target of IDR 2 trillion, with a total of 11,247 investors. The number of new SBR009 investors was 6,539 investors (58.14 percent of the total SBR009 investors) with a nominal purchase amount of SBR009 of IDR 1.13 trillion (50.02 percent of the total nominal purchase of SBR009).

The total number of new investors is dominated by the millennial generation, namely as much as 55.0 percent. Economic researcher from the Institute for Development of Economics and Finance (INDEF), Bhima Yudhistira, said this was a good progress because millennials, amid easy access to information, have become more literate in investment since attending school.

According to him, there are millennial investments whose money is still borrowed from their parents, but there are also those who invest from their salary even though they are just starting to work.

"SBR marketing has been quite massive in the past year and can be purchased through fintech. So millennials buy debt securities similar to top up digital wallets," Bhima told VOI, Monday, February 17.

There are 99 loyal investors who always buy SBR online from the SBR003 to SBR009 series with a nominal purchase of IDR 18.70 billion, dominated by Generation X. The issuance of SBR009 managed to reach all provinces (34 provinces) in Indonesia.

The majority of SBR009 investors (71.01 percent) placed orders with a nominal value of up to IDR100 million, but when viewed from the volume of orders, most of the investors purchased at a nominal value of more than IDR1 billion.

The largest number of SBR009 investors came from the millennial generation, with a total of 5,733 investors (50.97 percent). However, when viewed by volume, the largest orders were made by Baby Boomers (IDR 943 billion or 41.82 percent of total SBR009 orders).

Based on profession, the number of SBR009 investors is dominated by private employees (4,107 investors). However, by volume it is dominated by entrepreneurs (Rp. 867 billion).

So, the Account has no doubt invested in SBR009? Accountants can read more information about the Early Redemption facility in the information memorandum which can be downloaded at: https://t.co/jrFJFHH5Mb It's time to become a national hero!

- #IniUntukKita (@DJPPRkemenkeu) February 11, 2020

The average volume of orders for SBR009 per investor was IDR 200.52 million. There were 886 investors who made purchases amounting to Rp1 million.

The distribution of the number of SBR009 investors based on the more detailed age groups and professions is as follows:

Age Group

1. Generation Z (> 2000) / <19 years (Number of Investors 0.51 percent).

2. Millennial Generation (1980-2000) / 19-39 years (Number of Investors 50.97 percent).

3. Generation X (1965-1979) / 40-54 years (Number of Investors 28.03 percent).

4. Generation of Baby Boomers (1946-1964) / 55–73 years (Number of Investors 28.03 percent).

5. Traditionalist Generation (1928-1945) / 74–91 years (Number of Investors 1.71 percent).

The generation age division refers to Sprague (2008), Casey and Denton (2006).

One of the millennial investors named Ahda Baihaqi admitted to buying this investment instrument. This 25 year old young man bought the SBR009 to save money considering that the SBR009 is risk free.

About the SBR009

The government issues Government Securities in the Retail Savings Bond (SBR) type 009 specifically for individual (retail) investors. The SBR009 series is one of the six retail SBN series planned to be offered throughout 2020.

As an investment instrument, the SBR009 provides a coupon (interest) of at least 6.30 percent per year, derived from the Bank Indonesia benchmark interest rate, BI 7-day Reverse Repo Rate of 5.0 percent plus a fixed spread of 1.30 percent. The coupon is floating with floor, aka it can go up but cannot go down from the minimum limit.

Even though the coupon is calculated as a percentage for a year, the payment is made monthly and goes directly to the investor's account. This means that the amount obtained is the coupon per year divided by 12 months.

The public can order SBR009 online through distribution partners appointed by the Ministry of Finance. The capital to buy SBR009 is very affordable, starting at IDR 1 million (1 unit) only, and a maximum of IDR 3 billion (3,000 units) during the offering period.

If an investor buys SBR009 worth Rp1 million, the investor will get a gross coupon worth Rp.63,000 per year, or the equivalent of Rp.5,250 per month. However, this coupon does not take into account any tax cuts.

The government imposes a tax of 15 percent on the coupons received by investors because these coupons are classified as investment income. It should be noted, the amount of tax on SBR investors is lower than the deposit tax which is set at 20 percent.

From the government, the SBR009 coupon will be paid every month on the 10th with the first payment on April 10, 2020. If the 10th falls on a holiday, the coupon will be paid on the following business day without additional fees or compensation.

For SBR009, the offering period has ended on February 13, 2020. The SBR009 offering period for SBR009 is on January 27-February 13, 2020.

In 2020, the Government has scheduled the issuance of six retail government securities (SBN) instruments. This frequency is less than the realization in 2019, which reached 10 publications.

Last year, the Government released retail SBN almost every month. In 2020, retail SBN will be issued in January, February and June for the first half of 2020. Then, the rest will be issued in August and two instruments in October.

The series released include retail securities (SBR) series SBR009 and SBR010, retail sukuk (SR) series SR012, savings sukuk (ST) series ST007 and ST008, and retail government bonds (ORI) series ORI017.