The Jakarta Post
Coverage of the Financial System Stability Net (JPSK) in the upcoming JPSK bill is expected to take center stage during its deliberation at the House of Representatives, as banking may not be the only financial sector within its remit.
According to Finance Minister Bambang Brodjonegoro, several issues remain to be resolved to make way for the bill to be passed into law.
'At present, the bill only covers issues related to the banking sector. However, discussion has arisen about whether it should cover other financial sectors as well. Insurance, for instance,' he said recently.
The JPSK bill is a highly anticipated bill as it is hoped it will provide legal certainty for policy makers during periods of economic volatility that may pose a threat to domestic financial stability. It was initiated by the government and is included within the House's law-making priority list for 2015.
According to the bill, the Financial System Stability Committee (KSSK), comprising the Finance Ministry, Bank Indonesia (BI), Financial Services Authority (OJK) and Deposit Insurance Corporation (LPS), will have the authority to decide if an economic situation is heading toward a crisis, thus allowing the committee to take necessary steps to address the situation.
One important point is that the decision will have to be taken unanimously by all members of the KSSK.
Bambang said the government was currently waiting for members of the House's Commission XI, which oversees finance and banking, to complete their problem inventory list (DIM) to proceed to the next stage of deliberation.
The DIM consists of issues to be discussed during the initial part of the law-making process. It is traditionally submitted by the counterpart of a party that originally proposes the bill.
Since the JPSK bill was proposed by the government, Commission XI will submit the DIM.
Besides coverage, Bambang said the topic of the bank restructuring agency (BRP) needed further discussion. 'Is the BRP really required?' he said.
The bill stipulates that the KSSK will establish the BRP to restructure the banking sector in an 'abnormal situation'. The agency will have similar responsibilities to the now defunct Indonesian Bank Restructuring Agency (BPPN). However, the BRP will only be activated if one or more major banks is on the brink of collapse in a crisis. Funding for the BRP will come from the state budget among other sources.
Meanwhile, Mukhamad Misbakhun, a Commission XI member, and Golkar Party politician, acknowledged that several factions on the commission wanted other financial sectors to be included in the bill, such as insurance and capital markets.
'However, expanding the coverage will result in a more detailed subject and longer deliberation. The Golkar Party faction would like the bill to be approved as soon as possible, considering the high level of uncertainty the economy is facing,' he said on Sunday.
Maruarar Sirait, a lawmaker of the Indonesian Democratic Party of Struggle (PDI-P), however, argued that having a more comprehensive coverage within the bill was crucial.
'We are taking about the financial system. Sure, banking is the largest sector, but keep in mind that major banking conglomerates now have subsidiaries that operate in other sectors,' he said.
'The upcoming law must provide an accurate foundation for the authorities to make the right decisions, both in a normal situation and in a crisis.'
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