The OJK Must Remain Independent

Anwar Nasution, a banking analyst, said “[p]olitical elites must restrain themselves to ensure that the Financial Services Authority [OJK] is free from politics,” on Tuesday (18/1). Anwar explained that it is possible for politics to interfere with the OJK, since Law No. 21 of 2011 on OJK was made by politicians.

However, he cautioned that intervention could lead to another economic crisis, just like in 1997. That is why Anwar hopes the OJK’s chairman understands financial issues, statistics, and mathematics. “In addition to technical ability, the chairman should also have integrity and apply the rules fairly and firmly,” he added.

Bank Indonesia (BI) Deputy Governor, Halim Alamsyah voiced the same concerns. According to Halim, the OJK should be an independent agency, because transferring authority from BI to the OJK will affect the stability of the Indonesian financial system.

Article 55 of the OJK Law states that some authority will be transferred from the Ministry of Finance, the Capital Markets and Financial Institutions Supervisory Agency (Bapepam-LK), and BI to the OJK. The OJK will have authority over micro prudential financial issues, while BI will have authority over macro prudential issues.

Pursuant to Article 63 in conjunction with Article 55 of the OJK Law, the Governor of BI and the Minister of Finance are required to propose names of BI and Ministry of Finance officials to be transferred to the OJK.

“Documents, buildings, assets, IT, and human resources related to bank regulation and supervision will also be transferred,” Halim said.

In order to ensure a smooth transition, coordination is necessary to harmonize the vision and perceptions of the OJK Law’s mandate; the OJK structure; human resource policies and transfers; human resource management; asset utilization; and document transfers.

“Everything needs to be coordinated-- duties during the transition period, data and information needs, data sharing patterns, IT development and integration, and accountability for managing information including securing classified information,” Halim emphasized.

Sigit Pramono, Chairman of the Indonesian Banks Association (Perbanas), also hopes that the OJK Board of Commissioners will be independent and professional. He also hopes bank supervision will be better with the OJK.

“Supervisors should realize that banks are prudent investors, and a lot of information is classified. Not like capital markets which are likely to be speculative and have full disclosure,” said Sigit. Perbanas also hopes that the premiums will not burden the financial industry.

The establishment of the OJK itself, is based on Article 34 (1) of Law No. 3 of 2004 on Bank Indonesia, which states that the authority to supervise banks will be carried by an independent institution. According to Article 4 of the OJK Law, the purpose of the OJK is to make sure all activities related to financial services are fair, transparent, and accountable. However, there are still doubts about the OJK’s independence.

(Fitri Novia Heriani / Mahinda Arkyasa)