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Government plans omnibus bill on financial system amid insurance crises
Finance Minister Sri Mulyani Indrawati said the omnibus bill on the financial system would revise regulations related to financial services.
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Finance Minister Sri Mulyani Indrawati (right) speaks during a limited Cabinet meeting at the Presidential Office in Jakarta in this undated photo. (Antara/Wahyu Putro A)
T
he government plans to draft an omnibus bill to tighten surveillance of the financial system as it acknowledges that legal loopholes have limited its authority in the handling of the ongoing cases of mismanagement in state-owned insurance companies.
Finance Minister Sri Mulyani Indrawati said the omnibus bill on the financial system would revise regulations related to financial services, including in the Banking Law and the Financial System Crisis Prevention and Mitigation (PPKSK) Law.
Sri Mulyani Indrawati said the country still lacked the necessary legal basis to oversee crises in the nonbank financial sectors, adding that the law would be one of the highest priorities. The legal loopholes have complicated the handling of troubled state insurers including Asuransi Jiwasraya.
“We do not have the scope to discuss nonbank financial services so we need improvements in the legal framework to prevent and manage crises," said Sri Mulyani in Jakarta on Wednesday. She referred to the Financial System Stability Committee (KSSK), whose main task is to maintain financial stability and prevent crises in the banking sector.
The Supreme Audit Agency (BPK) has indicated a potential “systemic risk” over Jiwasraya’s failure to pay out Rp 12.4 trillion (US$908 million) on customer policies that matured in December 2019. The case is currently being investigated by the Attorney General’s Office (AGO) and the BPK with corruption allegations involving former Jiwasraya executives and two business tycoons.
House of Representatives Commission XI has formed a working committee to oversee Jiwasraya, as well as state insurers Asuransi Jiwa Bersama (AJB) Bumiputera and the massive collapse in value of Asabri’s investment portfolio that may disrupt their payments on matured policies.
“Anything that may have the potential to disrupt the financial system will be discussed during the formulation of the new omnibus bill to make the system more stable,” Sri Mulyani told a press briefing following a KSSK meeting.
