Government Bond Investment, Long-Term Investment Solution
13 Sep 2021

Government Bond Investment, Long-Term Investment Solution

Investors view bonds as a source of funds that can be disbursed depending on the terms and conditions. Some products in bond investments, especially those in the secondary market, can be traded later. In general, there are several types of bond investment products circulating in the market such as Saving Bonds Retail (SBR), Sukuk Tabungan (ST), Obligasi Ritel Indonesia (ORI), and Sukuk Ritel (SR). This time we will focus on SR and ORI.

Recently, the government has started offering the SR015 Surat Berharga Syariah Negara (SBSN) for investors as of August 20, 2021. In its management, SR avoids elements of gambling (maysir), ambiguity (gharar), and usury, and has been declared sharia-compliant by the National Sharia Board - Indonesian Ulema Council (DSN-MUI). Transactions in SR bonds uses the Asset to be Leased based contract. The yield will come from investment activities in the form of purchasing the rights to State Property (BMN) benefits, as well as the procurement of projects that will be leased to the government.

As for ORI, only 16,561 investors bought ORI when it was first issued in 2006. That number gradually increases every year, and in 2018 there was an increase of 42,733 investors (about 139% from the initial number in 2006) who purchased ORI up to IDR 18.33 trillion in total value. The data clearly shows an increase in public interest in purchasing ORI. How did it reach such a fantastic number? What is so attractive about this investment instrument? Let's discuss below.

There are two markets where bonds are circulated, namely the primary market and the secondary market. In the primary market, the price offered to the public as potential investors is determined by the government (Initial Public Offering or IPO). Usually, the purchase of bonds in this market can only be done within a certain period. Some of the bond products in this market can later be traded on the secondary market. ORI is included in the types of products that can be resold. Meanwhile, bonds in the secondary market can be traded at any time prior to the maturity date based on the market price prevailing at the time the transaction is made. The principal value of secondary market bonds is related to market movements, opening up the potentials for capital gains.

In government bonds, the government as the bond issuer will appoint securities institutions, investment platforms, or certain banks as agents to sell the bonds. As a bank entrusted with bonds, Bank DBS Indonesia through its priority banking DBS Treasures offers a wealth of bond investment options with currency options such as Conventional IDR (FR & PBS), Retail IDR (SR ORI), USD (INDON & INDOIS), and EUR (INDOEUR). For now, we will focus on government bond investments in IDR.

Bonds in the series of SR and ORI are issued by the government and offered within a certain period in the domestic primary market with fixed coupons. The government guarantees the return of the principal value of the debt at maturity. In addition, the issuer also guarantees that coupon payments of a predetermined percentage will be given periodically. This product is a product issued by the state and the payment at maturity is guaranteed in Law no. 24 of 2002/Law No. 19 of 2008 so you don't have to worry about its security. The coupon value offered in SR ranges between 5.47-8.05%, as for ORI it ranges between 5.57-8.25%.

Why invest in Bonds through DBS Treasures?

DBS Treasures as your trusted wealth management partner offers several unique advantages when you invest in bonds, including:

  • Intuitive wealth management
    Supported by reliable experts collaborating to analyse the latest market data, DBS Treasures manages your wealth based on your risk profile and proactively discusses it with you. In addition, you can also purchase primary and secondary market bonds, and register your SID anywhere and anytime with the innovative digibank by DBS application.
  • A wealth of options
    You can determine the terms of your bond investments according to your preference. In addition, DBS Treasures also offers a range of currencies available to invest in bonds such as the Indonesian Rupiah (IDR), US Dollar (USD), and European Euro (EUR).

  • Regular coupons
    From the funds you invest, a certain percentage of interest (coupon) will apply according to the provisions as a profit that you can get periodically for a certain period until the bond's maturity date.

By a minimum of IDR 500 million fund placement, you can join DBS Treasures as a priority banking customer and enjoy the benefits of bonds investments. In addition, you can also gain the latest insight and intuitive wealth management, based on the financial team of experts’ analysis and your risk profile. Information on the available Bond products can be accessed at DBS Treasures.