Edition 21: New Finance Bill to Allow Politicians to Govern Bank Indonesia
New Finance Bill to Allow Politicians to Govern Bank Indonesia
Source: Reuters
The People’s Representative Council (DPR) has introduced considerable changes to the Bill on the Development and Strengthening of the Financial Sector (RUU PPSK) that include controversial differences to the initial draft written in 2020.
If enacted, the Bill would change the eligibility requirements for Bank Indonesia’s (BI) gubernatorial candidates.
Currently, members of a political party are disallowed from becoming the governor of the central bank, as according to Law 23/1999 concerning the Bank of Indonesia which mandates the institution’s independence.
Batara Simatupang from the Indonesia Banking School said this was necessary to widen the pool of candidates for BI’s governorship and to find talent. He said, “don't kill the good intentions of political persons by limiting the source of candidates to being among the executives.”
BI’s role as an independent central bank focuses on achieving and maintaining macroeconomic stability, currency stability, and sustainable economic growth.
It has the ability to make monetary policy without interference from voters, elected officials, or the private sector, allowing it to avoid having to pander to the short-term interests of these groups in pursuing its long-term economic goals.
For this reason, Executive Director at the Center of Reform on Economics (CORE) Mohammad Faisal disagrees with these changes, saying “members of political parties clearly have political interests as long as they are still in office…conflict of interest is likely to occur.”
Research Director at CORE Piter Abdullah added that “Indonesia has a history where BI was used by those in power to print money to finance the government’s [political] interests” and that “history should not be repeated.”
Another major aspect highlighted is the changing roles of the finance minister from Coordinator to Committee Chair within the Financial System Stability Committee (KSSK).
The KSSK, consisting of four agencies (the Ministry of Finance, BI, the Financial Services Authority, and the Deposit Insurance Agency), was established to absolve agencies and officials from individual responsibility for bank bailouts by requiring a collective decision.
It is already criticized for reducing the independence, authority, and responsibility of its constituent agencies. A further erosion thereof can be argued if the Minister of Finance helms this committee.
As a large bill, there are more contentious changes as well, particularly within the commercial sector. This includes stricter regulations on commercial banks and the expansion of the Deposit Insurance Agency (LPS).
What Is Up, Indonesia?
🌎 Politics, Law & International Relations
MPR Mulls Scrapping Regional Elections: The People’s Consultative Assembly (MPR) and members of the Presidential Advisory Board are considering the idea of bringing back indirect regional elections to curb corruption by regional leaders. Many fear, however, that this would compromise democratic quality.
Ferdy Sambo Murder Trial Begins: The judiciary has started to consider the case of former Police General Ferdy Sambo who, in a case that shocked the nation, is accused of having orchestrated the murder of his subordinate in July of this year.
📈 Economics, Business & Technology
Indonesia to Grant Subsidy for Electric Vehicle Sales Next Year: The government intends to offer incentives in the form of subsidies for buying of electric vehicles by 2023, according to Transportation Minister Budi Karya Sumadi. Moreover, the amount of the electric vehicle and motorcycle subsidy will be equal to the fuel subsidy within a certain period of time.
Chief Investment Minister Says the Worst is Yet to Come: Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan said in an address to a business conference that the ongoing war in Ukraine could worsen the global economy and compromise Indonesia’s economic recovery.
🏛️ Society & Culture
Graphic Film of Bali Bombings at Kuta Memorial Distresses Victims’ Families: The violent, gory movie that was screened at Kuta's ground zero memorial shocked several of the deceased victim’s friends and family members. The decision has left the Australian Government "very disappointed”, and they will express their concerns to the Indonesian authorities.
East Java Police Chief Accused of Drug Trafficking: After the Inspector General Nico Afinta was removed due to public scrutiny of the Kanjuruhan football stadium incident, the newly-appointed East Java Police Chief Teddy Minahasa has been arrested for alleged drug trafficking only four days into his role.
🌳 Science, Environment & Health
Indonesia in Talks with African Countries to Export its Homemade COVID Shot: Indonesia is the first nation in Southeast Asia to attempt to export a locally produced COVID shot. Given the global surplus of COVID vaccines, export possibilities for the drug are considered to be limited.
KPAI Demands Government Halt Distribution of Indian Cough Medicine: Commissioner Jasra Putra of the Indonesian Child Protection Commission pleaded with the government to stop the distribution of cough medicine imported from India, which is claimed to be the reason behind the kidney failures of 131 children.
What We're Reading
On October 12, 2022, we commemorate the tragic loss of 202 lives in the Bali bombings of 2002, including 88 Australians and 38 Indonesians. This week’s reading will hopefully shine a light on this occurrence, to pay tribute to the victims' lives along with the bravery and resilience displayed by survivors and their families today.
Indonesia’s Response to Terrorist Threats has Grown Much Stronger since Bali Bombings: “The 20th anniversary of the Bali bombings is first and foremost a day to remember those lost in, and those who survived, the worst terrorist attack Australians have ever experienced. It is also an occasion to appreciate the efforts of all the Australians, Indonesians and others who have laboured in the interim to defeat the perpetrators of that atrocity and others, and who have done so with a degree of success that seemed unlikely in 2002.” - David Engel (Australian Strategic Policy Institute), The Strategist
WIUI Recommends
I'm recommending this movie to fellow Wuiboos after hearing it from a friend. A psychological thriller called Black Swan centers around an obsessed dancer who becomes too absorbed in her performance and gradually loses her sense of reality. The entire experience was riveting, gut-wrenching, and filled with insanity. Even though this film can be seen as being quite mature, it is nevertheless worth watching as it reveals underlying themes and messages regarding issues of mental health and self-conscience, and how these things can truly destroy us from the inside out.
~ Cult Leader Sharon
Join our community!
Disclaimer: We are not professionals. We are prone to bias and error so please verify and double-check everything! We highly encourage you to do your own research.