JAKARTA - President Joko Widodo (Jokowi) is considering issuing an emergency decree to return banking regulations from the Financial Services Authority (OJK) back to Bank Indonesia (BI). This was motivated by the performance of banking supervision by OJK during the COVID-19 pandemic.
Former BI Governor Burhanuddin Abdullah admitted that he did not agree if OJK was dissolved. Burhan tends to choose if there is a rearrangement of the OJK institution by merging it with BI. This means that OJK will be under BI's authority.
In the future, said Abdullah, the leadership in regulating financial institutions will still come from the Central Bank. Meanwhile, the OJK will be led by directors within BI.
"I do not agree if OJK is disclosed but it is better to rearrange with BI, OJK remains the authority under BI, in the chairman of the BI governor," he said, in a virtual discussion organized by the Narasi Institute, Monday, July 6.
Regarding non-bank supervision, you can follow France, whose stock exchange arrangements are outside the OJK. In addition, the non-bank financial industry can still be under the OJK which has merged with Bank Indonesia.
Burhan said that the background for the formation of the OJK was related to the conglomeration of the financial system in 2009. At that time, integrated banking supervision was deemed necessary.
Furthermore, said Burhan, it was the discussion of the Bank Indonesia Law related to the issue of financial conglomeration which later formed the Financial Services Supervisory Agency (LPJK) in 2001. LPJK is the forerunner to the establishment of the current OJK.
"When I returned to Bank Indonesia, the LPJK was discussed very intensively and was carried out by the government after Abdurrahman Wahid. At that time my question was whether this LPJK should be formed now? We are in a crisis situation. We need to organize various things in the economic structure. us, "he said.
According to Burhan, he also asked whether the plan to separate this authority was an effort to get out of the crisis. At that time, he also said, if it was not part of the effort to get out of the crisis, this LPJK could be postponed first. Finally, the DPR agreed to postpone the formation of the LPJK until 2010.
"In my mind, it is true that financial conglomerates exist, the need for integrated supervision is legal and it must be like that. In the end, the trigger was the Century Bank case, in which securities were a problem that pushed the formation of the OJK in 2013," he said.
According to Burhan, it is necessary to have an in-depth discussion regarding the plan to move banking supervision from OJK to Bank Indonesia. Because, in the midst of a banking condition that is facing a pandemic, it is necessary to be careful in deciding policies.
"Don't we rock the boat even though the ship is shaking, we have to think deeply about the future steps," he said.
OJK Still NeededChairman of the Regional Executive Board (BPD) of the Indonesian Young Entrepreneurs Association (HIPMI) South Sulawesi, Andi Rahmat Manggabari, said that the OJK institution is currently still very much needed.
"I think that the fusion of the OJK is too risky. For consolidation, of course we cannot decide hastily. Moreover, this discourse arises due to the tension caused by the crisis from the pandemic. OJK is also large and oversees many financial industries," he said.
However, Andi said, the integration of OJK with other institutions as well as the lack of strict supervision of the OJK so that several of its officials were named as suspects in the PT Asuransi Jiwasraya case, needed further attention. This is because OJK is relatively slow in terms of disclosing problems experienced by the industry and financial service entities.
In his opinion, a senior economist who also serves as Chairman of the Supervision Agency of Bank Indonesia, Fadhil Hasan, said that the transition process for transferring authority from OJK to BI would take a long time and be too risky to carry out.
According to Fadhil, the formation of the OJK supervisory agency also needs to be realized immediately. This is also to oversee the performance of the OJK in carrying out its duties.
"I agree that we cannot decide that OJK can be dissolved just because of the president's anger. This is too expensive," said Fadhil.
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