T

he Financial Services Authority (OJK) has asked the House of Representatives to earmark Rp 1.69
trillion (US$175.8 million) in the upcoming state budget law to finance its maiden operations next year.

“The allocation will be used to finance Rp 116.74 billion of operational activities, Rp 1.27 trillion of administrative activities, Rp 219.52 billion of asset procurement and the remaining Rp 83.15 billion
will be used to finance other supporting activities,” OJK chairman Muliaman Hadad said during a hearing with the House Commission XI on economic, finance and banking on Monday.

On top of the operational budget, Muliaman also urged lawmakers to consider a plan to construct OJK’s headquarters, which must be available by 2015.

Currently the OJK works out of several locations, such as at the Bidakara Tower in Kuningan and at the Capital Market and Financial Services Supervisory Agency (Bapepam LK) head office.

“The separate office locations have made it difficult for the OJK to conduct its activities optimally and efficiently. The OJK is also facing high operational costs due to this situation,” Muliaman said.

One of the commission deputy chairmen, the Golkar Party’s Harry Azhar Azis, said that legislators agreed in principal with the proposed budget allocation for the OJK.

“However, we need to have further discussions to learn more about the details of OJK’s future programs,” Harry said.

Indonesian Democratic Party of Struggle (PDI-P) lawmaker Arif Budimanta added that the OJK commissioners had to present its administrative activity details before getting approval from the House of the budget allocation proposal.

“For example, the OJK must be able to disclose the salaries of the board of commissioners,” Arif said.

Muliaman said that the OJK also planned to optimize its financing by collecting fees from the financial industry players so that in the long run the authority would be less dependent on state funding.

“As of now, both the OJK and the Finance Ministry are formulating the ministerial regulation for the fee-collection mechanism,” Muliaman said.

“Basically, the fee collection will be based on these principles; accountability, professionalism, proportionality and transparency and it will be subject to regular and thorough monitoring,” he added.

According to one of the OJK commissioners, Firdaus Djaelani, the fee collection percentage would be smaller than 0.2 percent. He also said that the OJK had not yet determined whether the fee would be levied based on assets, equity or profit.

Muliaman said he hoped the fee collection would start in 2013 so that the funds garnered could be used to finance OJK activities in 2014 and in the future.

The establishment of the OJK, a financial monitoring super body, is mandated by Law No. 21/2011. The total value of the financial sector subject to OJK supervision is around Rp 7,700 trillion.

The law, which was passed by the House on Nov. 22, 2011 states that the OJK will be responsible for the monitoring of all financial services previously monitored by the Finance Ministry, Bapepam LK and Bank Indonesia.

The law also stipulates the tranfer of all supervisory authority of the stock market, insurance and other financial services from the Finance Ministry and Bapepam LK to the OJK must be completed
by Dec. 31.

Bank Indonesia’s (BI) responsibility for monitoring the banking sector must shift to the OJK by Dec. 31, 2013, according to the law. After that date, BI will focus only on monetary policy.