There are currently various types of investment products. These investment products are usually issued and guaranteed by the government, one of which is government securities. For those of you who do not understand this type of investment product, we will discuss this type of investment in this article.

Government securities are one of the investment products that have been issued by the public with the aim of providing an opportunity for the public to participate in financing from a country. Which, every month, you will get a return from the activity. For more details about these government securities, you can read it through the discussion below. However, before that, you can also fill out the Trader Assessment so that you can consult before trading.

What are Government Securities (SBN)?

Government Securities or commonly referred to as SBN are one of the investment instruments that are currently increasingly being considered. Government Securities are securities in the form of a debt acknowledgement letter in the form of rupiah or foreign currency which will be guaranteed payment of interest and principal by the Republic of Indonesia, according to the specified validity period.
 
This SUN consists of Government Bonds (ON) and also State Treasury Bills (SPN). In short, SBN are securities that have been issued by the government to be able to finance the state budget and can also be an investment instrument for its holders (investors) because they can provide returns and profits. These Government Securities will be issued by the government every year.
 
The purpose of issuing SBN itself is to be able to finance the APBN (State Revenue and Expenditure Budget) and to be able to open up opportunities for the community as investors to be able to contribute to financing state development. Simply put, you as an investor can invest a certain amount of money with the government within the specified period. Then, when it matures, your money will be returned in full by the government. Every month, you will also receive benefits in the form of interest from the results of the SBN investment.

Types of SBN Based on Yield

The yield of SBN can be divided into two types, namely fixed rate and floating rate with floor. Here is an explanation of the two types of SBN based on the yield.

Floating with Floor

Floating rate is a type of yield whose coupon can change according to changes in the Bank Indonesia interest rate (BI 7 Day RR Rate). If the BI interest rate drops, then there is a floating rate with floor feature, aka at the beginning of its issuance, the government will set a coupon at that time as the minimum coupon limit. So, for example, if the BI interest rate has increased, then your yield will also increase. Meanwhile, if the BI interest rate drops, then the yield you get will remain at that minimum limit. So it will be very profitable because the yield can increase, but cannot decrease. SBN whose yield can be floating rate is SBR and also ST.

Fixed Rate

Fixed rate is another type of yield whose coupon remains at the beginning until maturity (i.e. for 3 years). For example, a coupon that has been set at 5.7% per year, then you will receive the yield every month. The coupon value will remain at 5.7% per year from the beginning until the maturity that has been set. SBN with a fixed rate yield is ORI and SR.

This fixed rate yield will be very useful for investors to avoid changes in interest rates in the market. So, you don't need to be afraid if interest rates are falling, the coupons you receive will not fall, but remain the same. Before continuing to the types of SBN based on management principles, there is an internal survey that you can fill out so that we can find out the performance of the GIC platform.

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Types of SBN Based on Management Principles

In addition to the types of SBN that are viewed based on their yields, there are other types of SBN that are viewed based on their management principles. These types are:

Conventional SBN

The first type of SBN is a conventional government security or what is commonly called a debt security. In this case, you will get interest every month. And at the end of the period, the government will also pay a certain amount of principal interest.

Savings Bond Ritel

As the name implies, namely savings, this product will be similar to savings or bank deposits. You cannot resell your SBR ownership in the secondary market. However, you can apply for the disbursement before the maturity date (early redemption) which has been set, which is a maximum of 50% of the total SBR ownership that you have. The tenor or maturity of this SBR is 2 years. You can start investing using this SBR starting from IDR 1 million - IDR 3 billion.

Indonesian Retail Government Bonds (ORI)

ORI is a government bond whose purpose is to open up the greatest possible opportunity for the public to be able to buy it directly. You can also resell this ORI on the secondary market. So that way, you will have the potential to obtain capital gain or loss as long as the ORI has been owned until the specified maturity date.

Sharia Government Securities

For the second type of SBN, it is based on sharia management, where your investment funds will automatically be recorded in state assets. This sharia SBN is community ownership of tangible assets that will later be leased to the government. Then, the government will later pay rent on the assets as a routine profit for investors who already own the assets.

Savings Bonds (ST)

This ST product is similar to the SBR product, but its management is based on sharia principles. In its issuance, ownership of this state asset as the underlying asset or basic asset of ST, there is an agreement (agreement or agreement) that will not be found in conventional SBN. Individual investors can buy ST from distribution partners with a minimum purchase of IDR 1 million and a maximum of IDR 3 billion. Just like SBR itself, you cannot sell your ST ownership on the secondary market.

Indonesian Retail Sukuk (SR)

Retail Sukuk or more popularly known as SR or Sukri which is generally similar to ORI products. As one of the sharia products, SR will also require a contract. Just like ORI products, you can also trade your SR ownership on the secondary market so that you will have the potential to get capital gain or capital loss when selling your SR ownership on the secondary market. You can buy SR starting from a nominal of IDR 1 million. If you already know the types, you can do a Preliminary Test to measure how far your expertise is in trading.

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Benefits of Owning Government Securities?

There are benefits that will be obtained when you invest in Government Securities or SBN. Here are some of the benefits that you can get if you invest in these government securities.

  • SBN Tax is Lower Than Deposit Tax

SBN investors, especially in ORI and sukuk products, will later only be taxed at 15%. This figure is lower than the tax on deposit investments, which is 20%. Thus, investors can also get a profit from large interest rates and small taxes.

  • Relatively Low Risk Level

Investment in government securities, especially in ORI and SUN products, will be guaranteed by a country. Thus, the investment will be more stable with a relatively lower risk when compared to other investment instruments issued by private companies. This means that funds invested in all forms of SBN will always generate a certain amount of profit per month, unless the country is experiencing an emergency such as a crisis or major conflict.

  • Competitive Profit Sharing and Interest

In the SBN investment, the amount of interest and the profit sharing system will be relatively larger when compared to the return on deposit investment. Which means, you can achieve an interest rate that can be quite competitive. Although the amount of the ORI interest coupon will differ per series, the value will always be adjusted based on the latest Bank Indonesia interest rate.
 
For example, the highest ORI interest coupon was in 2006, which was 12.05%. Meanwhile, the lowest interest coupon was 6.25% in 2009. This value will still be greater when compared to the highest deposit interest rate which is still at 6% even now. For information, interest coupons from government securities will always be paid every month. The total value of investment funds can also always be monitored by investors.

  • Can be Pawned

Nowadays, many people still doubt the security and liquidity of SBN. However, as a fact, this SBN product can be pawned at a pawnshop. Investors can also sell their SBN funds back on the stock market if they want to stop investing or transfer their SBN investment to another investor.

  • Safe from Market Fluctuations

Unlike most investment instruments, these government securities will be equipped with two sources of profit, namely capital gains and interest coupons. Both forms of profit will always be paid by the state to its investors consistently because they cannot be affected by current market fluctuations.

  • Contribution to National Development

As good Indonesian citizens, you will also contribute to national development and to improving the welfare of all people in this country by investing in SBN products. Of course, this is a matter of pride for investors who have invested.

Government Securities FAQ

Maybe for some of you there are still questions about the government securities themselves. So, some questions below have been summarized that are often asked by investors and prospective investors. The questions are:

What are Indonesian Government Securities?

Based on Bank Indonesia Regulation No. 17/19/PBI/2015 concerning the Second Amendment to Bank Indonesia Regulation Number 10/13/PBI/2008 concerning the Auction and Administration of Government Securities, what is included in the "Government Securities" or commonly called SBN are Government Debt Securities (SUN) and also Government Sharia Securities (SBSN). Government Securities or better known by the public as SBN is an investment product that has been issued and will be guaranteed by the government of the Republic of Indonesia. This retail SBN was created with the aim of providing an opportunity for the public to participate in financing state development. Simply put, you as a member of the public will lend a certain amount of funds to the government within a specified period of time. At maturity, the government will return the funds you have lent in full. Every month, you will also receive a return in the form of interest to your account.

Trader Assessment

What are the Ministry of Finance's Government Securities?

According to the Ministry of Finance, Government Securities (SUN) are securities in the form of debt acknowledgment letters in Rupiah or foreign currency whose interest and principal payments will be guaranteed by the Republic of Indonesia, according to their validity period. The current short and medium term strategies for managing SUN are: reducing refinancing risk, especially in the short term, extending the average maturity of SUN, balancing the maturity structure of the SUN portfolio so that it is in line with the development of the state budget and market absorption capacity, and developing and increasing the liquidity of the secondary SUN market, so that in the long term it can reduce the cost of borrowings.
 
Until now, SUN has been issued without a document (scripless securities). Ownership recording is done electronically. As mandated in Law Number 24 of 2002 concerning Government Securities, administrative activities that include recording ownership, clearing and settlement, and SUN interest and principal payment agents are carried out by Bank Indonesia. To facilitate the administration carried out by Bank Indonesia, Bank Indonesia has appointed a sub-registry tasked with recording SUN ownership for institutions other than banks.
 
To date, Bank Indonesia has appointed 15 (fifteen) sub-registries, namely: Bank Central Asia - Subregistry, Bank Danamon - Custodial Services, Bank Internasional Indonesia - Agent Sub Registry, Bank Mandiri, Bank Negara Indonesia, Bank CIMB Niaga, Bank Rakyat Indonesia, Bank Permata, Citibank NA - Client Account, Deutsche Bank AG, HSBC - Securities Services, Kustodian Sentral Efek Indonesia (KSEI), Standard Chartered - Custodial Services, Bank Panin - custodian, Bank Mega - Custodial Services. The ownership recording system with the division into a central registry and sub-registry is known as the two-tier system.

Are there Government Securities at BCA?

BCA also has government securities under the name of Retail Government Bonds Series ORI020. Bank Central Asia (BCA) customers can buy retail Government Securities (SBN) easily without going to the bank. You and other BCA customers can make purchase transactions through the KlikBCA and Welma applications. Just so you know, KlikBCA has provided four types of retail SBN, namely SBR (Retail Savings Bond), ORI (Retail Government Bond), ST (Savings Sukuk), and SR (Retail Sukuk). You don't need to be confused about how to make this transaction, because the method of buying retail SBN itself will be quite easy, namely:
  1. You open KlikBCA through your device's browser. Then, you can enter your user ID and password.
  2. Then, you click on the "Investment" menu and then tap on "Government securities".
  3. You can continue by entering your email address and account number then click "Continue".
  4. Next, you click on the terms and conditions column and click "Continue" to continue the transaction process. Then, you can choose the investment product you want to buy.
  5. Then, you enter the purchase value, then click the terms and conditions column and click "Continue".
  6. Next, you can immediately complete the payment via KlikBCA, an Automated Teller Machine (ATM), or by using an EDC machine. The SBR purchase process is complete.
  7. To check the transaction, you can click "Order" in the "Transaction Type" category.
  8. Then, you can set the status option by clicking "Payment successful". The device screen will then display the transaction history that has been successfully made.
You can buy all of them online through KlikBCA. Quoting from Solusi BCA on their Youtube Channel, you only need two minutes to be able to make a transaction. However, before making the purchase, you must register for KlikBCA. You can do the registration online through the existing device. After knowing what government securities are along with their types and benefits, you can also make transactions by following the methods explained above.

You can also register to trade on GICTrade by downloading the application on the App Store or App Store via the device you have. In addition to trading, you can invest in the types of SBN that have been explained above. You will get and feel the benefits of investing in SBN. And don't forget to invite your friends to trade or make yourself an IB so you can get extra money that you can use in real-time.