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View all search resultsBI expected to get job creation mandate soon
The government and the House of Representatives are scrambling to pass a bill that will give Bank Indonesia (BI) a new mandate on job creation, which economists say could weaken the central bank’s independence.
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The logo of Bank Indonesia (BI) is seen in front of the central bank's building in Jakarta. (JP/Rafaela Chandra)
T
he government and the House of Representatives are scrambling to pass a bill that will expand Bank Indonesia’s (BI) responsibility beyond monetary stability to ensuring a strong labor market, a move economists say could weaken the central bank’s independence.
Mohamad Hekal, deputy chairman of House Commission XI which oversees financial affairs told The Jakarta Post on Thursday that lawmakers had proposed to include a new job creation mandate in a revised financial sector law but noted the deliberation process with the government was “not yet done”.
Fauzi Amro, another deputy chairman of the commission, replied “not there yet” when the Post asked on Thursday for confirmation whether BI’s tasks would be expanded to include an employment goal next to inflation control, similar to the dual mandate of the United States Federal Reserve (Fed).
The Commission's chairman, Mukhamad Misbakhun, said on May 25 that the bill would “hopefully” be wrapped up “at the beginning of June”, noting that “some regulations have been synchronized" with the government’s problem inventory list (DIM) - a stage a bill must go through before being put to a plenary vote.
Misbakhun separately told the Post on Thursday that a “finalization meeting” would decide whether the job creation mandate makes it into the revision.
The bill to revise Law No. 4/2023 on Financial Sector Development and Strengthening (P2SK) has been under deliberation since last year. The omnibus law on the financial system contains provisions governing BI’s independence and its existing mandate, among other stipulations on the wider banking sector and capital markets.
Currently, the central bank’s mandate consists of safeguarding the rupiah’s exchange value and controlling inflation “within the framework of supporting sustainable economic growth”, according to Article 7 of the P2SK Law.
