On Jan. 30, Indonesia’s Ombudsman flagged poor progress in the recovery of outstanding Bank Indonesia liquidity assistance (BLBI) dues. These are estimated to be near Rp 211 trillion (US$12.8 billion), a figure nearly equal to the cost of a new Jakarta-Surabaya bullet train or 30 percent of the total budget for the new capital, Nusantara. Of the total amount due to the country’s taxpayers, a paltry 0.2 percent has been recovered. BLBI funding was provided as an emergency cash injection by the central bank during the widespread banking sector collapse of 1997–1998.

While the BLBI Task Force must be held accountable by the Ombudsman and redouble its recovery efforts, this dire situation highlights the critical importance of institutional control. In developing countries, the impact of financial crises is often amplified because the institutions designed to protect the interests of common citizens and taxpayers are found "asleep at the wheel".

While this was certainly the case in 1997–1998, the decades since have seen the strengthening of regulatory bodies. Today, two major institutions supervise the banking, financial and capital markets alongside Bank Indonesia, the central bank tasked with macroeconomic management.

Institutional control is spearheaded by the Financial Services Authority (OJK), which monitors the stability of banks and capital markets, and the Deposit Insurance Corporation (LPS), which serves as a specialized corporation dedicated to insuring depositor funds against potential bank failures.

These entities are well-funded and employ some of the highest-paid professionals in Indonesia. Unlike in 1997–1998, they now possess the enormous advantages of technology, big data and customized analytical tools to stay ahead of the curve. And yet, as recent stock market meltdowns demonstrate, institutional control remains inconsistent and, at times, inadequate.

There are four specific areas where control must be strengthened to achieve GCG.