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House, politicians tighten grip on financial sector in new omnibus bill
A new omnibus bill is poised to pave a way for politicians and lawmakers to tighten their grip on authorities in the financial industry, raising concerns among experts and professionals that it may undermine governance of the sector.
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An almost empty plenary room of the House of Representatives is seen in this undated photo. (Antara/Akbar Nugroho Gumay)
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new omnibus bill is poised to pave the way for politicians and lawmakers to tighten their grip on authorities in the financial industry, raising concerns among experts and professionals that it could undermine governance of the sector.
The bill, named the financial sector development and strengthening (PPSK) bill, was initiated by the House of Representatives back in 2020. Lawmakers finalized the draft in September and will begin discussing it with the government next month.
The bill allows lawmakers to wholly own the leadership selection process of the Financial Services Authority (OJK) and Deposit Insurance Corporation (LPS), as seen in revised Article 11 of the OJK Law and Article 65 of the LPS Law, meaning the changes would remove the involvement of the government and Bank Indonesia (BI) and, in the case of the current process for the OJK, also eliminating participation from the public.
Revised Article 67 on the LPS selection process erases a ban that prevents political party leadership from entering the LPS candidacy, expanding a similar move that lawmakers made on the central bank in a 2004 revision of the BI Law, which removed a ban of both members and leaders of political parties.
The bill also introduces a supervisory body for both the OJK and the LPS with its five members being elected by lawmakers and will act as their arm to oversee those agencies. Previously, the body was created only for BI under the 2004 law.
“I see the House really wants to take over. That’s a big difference in this bill. The political tones get more intense as well,” financial-sector expert Manggi Taruna Habi, who has held positions in notable financial institutions, told The Jakarta Post on Monday.
Read also: Explainer: Financial system bill heralds changes from crypto to BI
