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Jakarta Post

New OJK official wants stronger supervision of financial industry amid insurer problems

  • News Desk

    The Jakarta Post

Jakarta   /   Tue, January 14, 2020   /   08:21 am
New OJK official wants stronger supervision of financial industry amid insurer problems Deputy Finance Minister Suahasil Nazara. (kompas.com/ Ahmad Fauzi )

Newly appointed Financial Services Authority (OJK) ex-officio commissioner Suahasil Nazara says he aims to strengthen the agency's supervision of both the banking and nonbanking financial sectors to better detect potential threats.

His statement comes amid the financial crisis in state-owned insurance company Asuransi Jiwasraya and a deep plunge in the value of stocks invested in by state-owned insurer Asuransi Sosial Angkatan Bersenjata Republik Indonesia (Asabri).

"Strong supervision that is able to provide an early warning is needed," said Suahasil, who is also the deputy finance minister, after his swearing-in ceremony at the Supreme Court in Jakarta on Monday.

"I believe that the internal and audit processes can still be performed, but we need to dig deeper [to detect] whether a financial institution is facing a problem,” he added.

Suahasil also called for closer coordination between the OJK and the government as some state-owned enterprises (SOEs) are running businesses in the financial industry.

The OJK, which is responsible for supervising financial institutions, including insurance companies, and protecting consumers, has come into the spotlight after Jiwasraya failed to pay out on policies worth Rp 12.4 trillion (US$889 million) that fell due in December, allegedly as a result of corruption and investment mismanagement.

Meanwhile, Asabri, which manages social insurance and pension funds of personnel of the National Police, the Indonesian Military (TNI) and employees of the Defense Ministry, reportedly lost Rp 10 trillion (US$728.4million) as several stocks in its portfolio endured losses of more than 95 percent last year.

Some of the stocks in Asabri’s portfolio were similar to those of ailing Jiwasraya, which were deemed “low quality stocks” by the Supreme Audit Agency (BPK).

In the financial sector, Suahasil said, the regulators often had to dig deeper in order to be able to detect whether a situation faced by a financial institution was good or bad.

“There should be a mechanism to identify whether a company's financial report is disclosing its real performance or misleading information,” he stressed.

In the same event, OJK chairman Wimboh Santoso expressed the hope that the appointment of Suahasil would strengthen his agency.

"With an ex-officio member from the Finance Ministry, it will strengthen us and give more [input] when the commissioners make a decision," he said. (dfr)