|SSC looks to invest abroad - New tracks in view of 'over-capacity'
|The Social Security Corp (SSC) is about to start investing in world markets. Over the past 22 years, the corporation helped in taking over major investments in the local market, targeting different sectors, which have become one of the main pillars in supporting the economy.|
Director-General of the corporation Ahmad Abdel Fattah reiterated last week the SSC wants to employ its liquid assets in investing in international money markets in view of the possible high rates of return.
He, however, recognizes such investments are not easy to realize. "The corporation today has abundant liquid resources that require new tracks of investments," Abdel Fattah explained. "These tracks are not easy to find due to the current unstable conditions in the global economy." Today, investment corporation in the local companies stand at JD 515 million, 31 percent of the SSC's investments in the Kingdom which are estimated at JD 1.6 billion.
More than 1.5 million people are benefiting from the corporation's services. These cost the SSC more than JD 636 million in premiums. This is besides the about 400,000 SSC beneficiaries who are still working in the Kingdom.
The SSC administrators assume the number of working beneficiaries will go down gradually due to many factors, including social and economic ones. This has been on the mind of the SSC management who is now thinking of expanding its investments overseas.
"We have today some JD 800 million in bank accounts. It is a big amount of money but the recent reduction in the interest rates have affected our revenues from these accounts," Abdel Fattah pointed out.
But does investing in international financial markets help the SSC to increase its resources in future? "I don't think so," replied Dr Munir Hamarneh, professor of economics at the University of Jordan. "Being a massive company like the SSC forces you to think twice before you leap," he said. "Speculations at the international financial markets may harm the corporation's reputation and, eventually will affect its local businesses in the Kingdom."
Economists have received the SSC plans to expand investments abroad with mixed feelings. While many of them see the move as a great opportunity to provide the economy with much needed reserves, others warn the corporation may lose much of its credibility among beneficiaries if it decided to go after unapt investments.
"There is no harm in expanding SSC investments worldwide. But it should be first targeted in the direction of profitable resources that will certainly increase the value of SSC's shares," Hamarneh added. "Investments like those of the SSC's must go through productive enterprises or partnerships. The financial markets work like a trap for the big corporations that depend largely on insurance and social security systems."
Abdel Fattah emphasized SSC's investments abroad will not be applied at the expense of local ones. He said the final decision on such investments will be up to the government and the Central Bank of Jordan, it will scrutinize carefully all the potential advantages of such investments.
But the question remains about the SSC's intentions to increase its local investments. Those who are against the idea suggest the SSC wants to double its resources through multinational investments, something which has limited guarantees of profitability.
They indicate many financial markets in Europe and the US are in an unstable state due to the slowdown in the global economy. It also demarcates the chances ahead of the SSC's plans to enter the world financial markets. What Hamarneh means by his "profitable resources" is the SSC must look for ways to acquire shares in some of the major or intermediate enterprises around the world, especially these in the Far East and Europe.
He explained the corporation needs to diversify its resources and bring in hard currency.
"Local investments have already met the SSC demands," said economist Abdallah Al Malki. "The local economy can't take in more of the SSC's ample resources and need to go outside the country."
He, however, called on the government to enact greater regulations for such investments, particularly when it comes to the Social Security Corp.
"We can see how foreign reserves at the Central Bank are increasing every month in view of the successful foreign investments by the local private sector. So why not the SSC," the economist said.
The corporation has succeeded thus far in attracting foreign investments in the local market. Last month, the corporation reached an agreement with the Syrian Charm Hotels Co to manage two hotels in Jordan.
The hotels will be located in Amman and the Dead Sea, and supervised by the SSC. This agreement extends the corporation's shares in Jordan's tourism sector. The current SSC's investment in the tourism sector is JD 100 million.
The corporation holds the 60 percent government portion of the Jordan Telecom Co. SSC sources said the corporation may consider buying more of JTC's shares, currently on sale in Jordan. The government is selling 37.5 million of its shares in the company, representing 15 percent of the company's issued share capital.
The offering consists of a public offering in Jordan and a private offering to Jordanian and international investors. As part of the offering process, Jordan Telecom will have its shares listed on the Amman Stock Exchange in November.
If the SSC bought more of the JTC shares, economists believe the move will fortify the corporation's presence in the local financial market. The SSC, however, is keeping silent about this.