T

he government and the House of Representatives (DPR) will intensify “hearing sessions” because legislators are now left with only 40 working days ahead of the deadline to establish Indonesia’s Financial Service Authority (OJK), a top official said Friday.

Chairman of the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK), Fuad Rahmany, who also heads the government committee that drafted the OJK bill, said the discussions were still stuck in the fundamentals of the proposed bill drafted by the Finance Ministry.

The hearing sessions with the House would be intensified in hopes of reaching an agreement before the deadline, Fuad said.

“There will be sessions with House members from Nov. 7 to 9, and more the following week. I hope an agreement could be reached before the end of December,” Fuad told reporters at a workshop for capital market journalists in Jimbaran, Bali.

Article 34 of Law No. 3/2004 on Bank Indonesia (BI) states the OJK should be established before the close of 2010.

“There will be legal consequences if the deadline is not met,” Fuad said, without providing details. However, he confirmed the OJK would not be operational by the start of 2011, saying the word “established” could imply several meanings, foremost legally and secondly operationally.

Fuad still hoped the House could pass the bill into law before year-end so that no adverse legal consequences would subsequently have to be addressed.

If the House passes the bill in December, it could take up to a three-year transition period before the OJK would be completely operational, he said, adding that he expected the OJK will start operations in early 2014, at the latest.

“In the meantime, BI will still maintain supervisory responsibilities,” Fuad said. Talks between the government and the House on the establishment of the OJK are currently stuck in basic issues, such as whether or not BI has to relinquish its banking supervision function, he said.

The OJK, intended to supervise all financial establishments — including banks — under one integrated institution, has been discussed at length by special teams set up by both the House and the Finance Ministry since the beginning of 2010.

“Some people think that banking supervision responsibilities will no longer be held by BI, but the fact is it’s the other way around,” Fuad said, adding that the OJK will consist of people from BI and Bapepam-LK. “So BI will still hold its banking supervision function”. BI currently has three functions: monetary, banking and payment. However, the BI Law states that banking supervision should be taken over by the OJK before the end of 2010.

The central bank has also proposed an alternative model to the House, in which the OJK will still be under the supervision of the BI Governor, presently Darmin Nasution.

Three House sessions have been held to finalize the provisions of the proposed law since mid-year, but talks are becoming more divergent instead of coming closer together.

Conflicting opinions arose between BI and the ministry on the structure and workings of the OJK, with both proposing themselves to lead the body. Another issue of contention regards the appointment of the OJK Board of Commissioners, Fuad said.

The OJK discussion teams, comprising legislators and Finance Ministry officials, have decided to travel to England, Germany, Japan and South Korea to study the implementation of the OJK in each country to improve their understanding of the issues in hopes of reaching a final agreement. (est)