T

he Financial Services Authority (OJK) and the Business Competition Supervisory Commission (KPPU) on Tuesday inked a memorandum of understanding (MoU) in a bid to strengthen antimonopoly business practices and fair competition in the finance sector.

OJK chairman Muliaman D. Hadad said the agreement was necessary to uphold fairness, transparency and accountability of business entities for the benefit of the public.

'€œWe want to achieve financial stability by promoting systemic reliability. Trust in financial services will erode if companies are known to have engaged in unfair practices.

'€œThe aim is for both the OJK and the KPPU to coordinate with each other and act on their own regulations to supervise business practices,'€ Muliaman said during the signing of the agreement on Tuesday.

He added that the agreement also aimed to stabilize the finance sector and promote efficiency and innovation.

'€œCompetition is not an obstacle to business, rather, it is normal. To keep competition healthy, supervision is needed,'€ Muliaman added.

Meantime, KPPU head M. Nawir Messi said the finance sector would become one of the institution'€™s top five supervisory priorities due to its rapid growth, along with the food, energy, infrastructure and health industries.

'€œWith this agreement, we will be able to protect the public interests as well as give all business players an equal opportunity to compete. This is the start of reform in the sector,'€ Nawir said.

He said he was confident the finance sector would be able to weather the ASEAN Economic Community (AEC) in 2015.

'€œCompetition is not an obstacle to business, rather, it is normal. To keep competition healthy, supervision is needed.'€

Muliaman, meanwhile, added that the domestic finance sector was different to other regional nations and that it needed to boost efficiency.

'€œAround 70 percent of the finance sector market share in Indonesia is dominated by 16 large banks [...] In comparison, Singapore only has four dominating banks and Malaysia more or less has two,'€ he said.

With the agreement, the OJK and KPPU will exchange information and synchronize the finance sector with existing business laws.

Both institutions will also exchange experts to assist the efforts of each institution and collaboratively provide training and education on business competition.

Both sides would meet at least once a month in order to discuss progress.

The agreement will be in effect for the next five years, with the possibility of extension.

Meanwhile, Muliaman said that the agreement was not related to the OJK'€™s regulation on financial conglomerate monitoring, as the regulation was already in practice.

'€œWhat we do [through that regulation] is supervise main conglomerate bodies and subsidiaries. It is still in the pilot stage, the regulation will be fully implemented next year,'€ he said. (dyl)