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Talks still bogged down as deadline for bills nears
With their deadlines less than two weeks away, the bills to found a powerful financial services authority (OJK) and social insurance bodies (BPJS) remain bogged down in deliberations
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ith their deadlines less than two weeks away, the bills to found a powerful financial services authority (OJK) and social insurance bodies (BPJS) remain bogged down in deliberations.
The bills have gone through several sitting sessions as the government and the House of Representatives have disagreed on strategic issues, while the current House sitting session ends on Oct. 28.
In deliberations on the BPJS bill, there has yet to be an agreement on insurers’ transformation and capitalization, while the OJK bill deliberations are still stuck on the makeup of the board of commissioners.
If passed, the OJK would create a financial super body that would supervise thousands of trillions of rupiah at banks, insurers and the stock market, while the BPJS would protect low-income people and the poor by providing healthcare and pension services.
“OJK is still in discussion. We, in the government, are still discussing two main issues,” Finance Minister Agus Martowardojo said on Wednesday, adding that the makeup of the chief of the OJK was one of the issues being intensively discussed.
The government wanted former officials from Finance Ministry’s non-bank regulator Bapepam-LK and Bank Indonesia (BI), who have experience in overseeing the finance system, while legislators remained adamant on the requirement that the OJK be an independent body and thus not be chaired by officials from other financial institutions.
BI officials have repeatedly said that they prefer banking supervision to remain under the central bank to simplify policy making as banking and monetary issues are intertwined.
While the government is still formulating the OJK’s top position, Harry Azhar Aziz, a member of the House’s OJK bill special committee, said on Wednesday that the committee had internally agreed on a crisis coordination protocol to be included in an article of the OJK bill.
The protocol will be coordinated in a Financial System Stability Coordination Forum (FKSSK) comprising the Finance Minister as the coordinator, BI governor, head of the OJK board of commissioner and head of the Deposit Insurance Corporation’s (LPS) board of commissioner, he added. They will meet at least once every three months, he said.
“In times of crisis, the initiative for a meeting could come from one of the members to decide if security measures [bailouts] are necessary,” Harry said.
If state-funded bailouts are needed in times of crisis, the Finance Ministry must bring the case to the House in the first place and the lawmakers would decide within 24 hours if they approve or disapprove of the forum’s decision, he added.
