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OJK must be more independent
A key problem with the OJK is that it relies 100 percent on the financial industry to cover its operational costs.
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The logo of Financial Services Authority (OJK) is seen at its headquarters in Jakarta. (Kontan)
T
he newly appointed chief of the Financial Services Authority (OJK), Wimboh Santoso, has promised to improve efficiency within the OJK, such as by cutting expenses and reducing the number of its deputy commissioners.
Cutting costs is not a very critical strategy that needs to be taken at this stage. This move is usually taken by corporations and in order to look dashing when a new CEO is appointed.
Instead, the OJK should focus more on quality improvement, as it faces now both internal and external challenges. A key problem with the OJK is that it relies 100 percent on the financial industry to cover its operational costs. Each bank in Indonesia pays a fee of 0.045 percent of its total assets to the OJK.
There are several other action plans that deserve to be given priority by Wimboh, a former senior executive of Bank Indonesia (BI).
First of all, the OJK must be more independent. Independence is listed as the second principle of the Core Principles for Effective Banking Supervision of the Basel Committee on Banking Supervision.
The essence of this principle is that there should be no industry interference that compromises the operational independence of the supervisors, and this includes the budget for staff training and travel.
If the OJK is fully funded by contributions from the industry, then the industry will have a tendency to undermine OJK’s authority.
