JAKARTA - The resignation of a number of key officials of the Financial Services Authority (OJK) and the President Director of PT Bursa Efek Indonesia (BEI) simultaneously on Friday, January 30, also became the concern of market participants.
This event is not only seen as an internal institutional dynamics, but also raises market concerns about the independence of regulators amid the strengthening role of the state in the financial sector.
For information, the Chairman of the OJK Commission Board Mahendra Siregar; Head of Capital Market, Derivatives Finance, and Carbon Exchange Supervisory Executive (KE PMDK) Inarno Djajadi; Deputy Commissioner for Issuer Supervision, Securities Transactions, Special Inspections, Derivatives Finance, and Carbon Exchange (DKTK) I. B. Aditya Jayaantara, and President Director of PT Bursa Efek Indonesia (BEI) Iman Rachman officially resigned from their respective positions.
Director of the Digital Economy Center of Economic and Law Studies (Celios) Nailul Huda assessed that the series of resignations were difficult to separate from the indication of government intervention, especially regarding the policy of increasing the investment limit of the stock market by pension funds and insurance companies.
Huda assessed that policies related to pension and insurance funds were crucial points, given that both industries were often involved in a number of stock cases in the past.
According to him, the increase in the investment limit for shares without strict supervision has the potential to increase the risk to public funds.
"Like the government's intervention on the investment limit of the stock market from the Pension and Insurance Fund which increased. On that occasion, Mahendra was also there who must have realized the risks. Cases that occurred in the previous stock cases are related to these two industries. If it is left too high, the risk of lost public funds is also high. So indirectly this intervenes in the authority of the OJK," he told VOI, Friday, January 30.
He added that too deep intervention not only risks weakening the regulatory oversight function, but can also have a negative impact on the stability of the financial market, including the movement of the Composite Stock Price Index (JCI).
Although external factors such as the MSCI decision are said to be the initial trigger, Huda believes that the root of the problem remains in domestic policy pressures.
"Yes, it is definitely triggered by MSCI, but I think the cause is the government's intervention too deep. The problem is that we just had a meeting between the ministers of economy with BI and OJK about pension and insurance funds," he said.
The assessment, according to Huda, was strengthened by the meeting between the ministers of economy, Bank Indonesia, and OJK which discussed the issue of pension and insurance funds.
He suspected that the meeting was also part of a series of events that led to the resignation of a number of officials.
"I suspect that is the cause," he said.
Meanwhile, the Head of the Center for Macroeconomics and Finance at the Institute for Development of Economics and Finance (INDEF) M. Rizal Taufikurahman, emphasized that until now there has been no official fact or statement that can conclude that there is direct pressure from the government and Danantara on OJK.
However, he admitted that the simultaneous resignation of several key figures was natural to raise questions among market players.
"Until now, there has been no official fact or statement that can conclude that the resignation of a number of OJK officials occurred due to direct pressure from the government or Danantara. However, it must be admitted that the simultaneous resignation of several key figures naturally raises questions in the market," he told VOI, Friday, January 30.
According to Rizal, the main issue is not whether or not intervention is right, but rather the market's perception of the independence of supervisory institutions amid the increasing involvement of the state in the financial sector.
He explained that in an economic perspective, governance issues like this are considered very sensitive because they are directly related to investor confidence.
From the market side, Rizal explained that the fastest impact of uncertainty at the regulator level is usually reflected in the sentiment and volatility of the JCI, especially in the banking and financial services sectors.
According to him, in this condition, investors tend to be wait and see or demand a higher risk premium.
He added that pressure on the market could be temporary if the filling process of positions at the OJK and BEI could be carried out quickly, transparently, and filled by credible and independent figures.
"But if there is an impression that the OJK's supervisory function is weakened or too close to short-term policy interests, then the impact could be deeper and medium-term for investor confidence," he said.
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