House asks for more time in bank super body talks

The House of Representatives has asked for more time to deliberate the draft law on the nation’s proposed financial super body called the Financial Services Authority (OJK), citing disagreement over the makeup of the board.

Nusron Wahid, chairman of the House’s OJK inquiry team, said in Jakarta on Monday that there was no sign of a compromise on the bill as the House and government were still divided over who would be appointed to the OJK’s board of commissioners.

“We will send a letter to the House speaker and the Consultative Body so that the deliberations on the bill can be extended without a time limit,” said Nusron Wahid, chairman of the OJK inquiry team.

The House had previously wanted the bill passed on Dec. 17, the last day of this year’s House session.

Since House members will recess from Dec. 18 until the middle of January, it is unlikely the bill will be passed this year, as demanded under the Bank Indonesia law, which called for the establishment of the financial supervision body.

“If an agreement is reached, we could make the Dec. 17 plenary. But if not, there’s potential for a delay, and we will resume talks in January,” Nusron said.

The government had insisted that the OJK’s board of commissioners’ seven members should comprise one official from the central bank (BI), one from the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK), one experienced banker, one capital market executive, one non-banking executive, and two academics.

According to the government, Bank Indonesia and Bapepam-LK should be represented on the board to ensure international standards are met.

The government had also demanded the two government representatives on the board should also have voting rights like those given to the other members.

Nusron said House members agreed with the government’s proposal to have two representatives on the board. “We see the importance of the existence of ex-officials on the OJK for harmonization, coordination and synchronization with the government’s and central bank’s policies.

So there’s already an article in the OJK law about regular coordination and coordination in crisis with the government and the central bank without their being members of the board of commissioners,” Nusron said.

However, the House rejected the government’s demand that the two officials should have voting rights, he added.

According to the law on Bank Indonesia, the OJK should operate independently from the government, he added. “However, in the context of the words ‘outside of the government’, there’s a difference in interpretation,” he said.

The OJK will supervise Rp 7,000 trillion (US$777 billion) in public funds in the banking, capital market and non-banking sectors and therefore should be free from a conflict of interests, he added.

The delay in the approval of the law would result in the postponement of the establishment of the OJK, which according to Bank Indonesia, should be set up before the end of this year.

Asked if the delay would have legal consequences, Nusron said “no”, and cited that the OJK had been earmarked for creation on Dec. 31 2002, but was not.

“The law was then revised and the House amended it in January 2004. So, then there was a one year lull in the law,” he added. (est)