BI to retain its supervisory grip<\/p>\n
JAKARTA (JP): The government and the House of Representatives
\nprincipally agreed on Monday to retain Bank Indonesia's banking
\nsupervisory function until the end of 2002, paving the way to the
\nresolution of a key obstacle to a new central bank bill.<\/p>\n
The chairman of the House's special team to deliberate the
\ncentral bank bill, Tayo Tarmidi, said the banking supervisory
\nrole would be handed over from the central bank to a new
\nindependent body after 2002.<\/p>\n
He said the new body would supervise banks and all financial
\nservices which manage public funds such as pension funds,
\ninsurance and leasing firms and the capital market, effectively
\neliminating the Capital Market Supervisory Agency.<\/p>\n
\"This is the result of our private meeting with the
\ngovernment,\" he told reporters after meeting with Finance
\nMinister Bambang Subianto and Bank Indonesia Governor Sjahril
\nSabirin.<\/p>\n
Bambang told reporters separately that the new body would form
\none of the three \"pillars\" of a reformed financial system.<\/p>\n
\"In the future we will have three pillars: the monetary system
\nhandled by Bank Indonesia, the fiscal sector handled by the
\nMinistry of Finance, and the financial services sector under the
\nnew body,\" he said.<\/p>\n
Tayo added that the new independent body would be responsible
\nto both the country's Supreme Audit Agency and the House of
\nRepresentatives.<\/p>\n
The House is scheduled to approve the new central bank bill on
\nApril 16 at a plenary session.<\/p>\n
The government and the House have been debating for a month
\nthe new central bank bill, designed to boost Bank Indonesia's
\nindependence, and faced a deadlock over a proposal to hand over
\nthe central bank's banking supervisory role to a new agency by
\nthe middle of 2000.<\/p>\n
The House insisted that the banking sector should continue to
\nbe supervised by Bank Indonesia, while the government proposed a
\nseparation of the role, allowing the central bank to concentrate
\non designing monetary policy and monitoring the flow of payments.<\/p>\n
Separately, the chairwoman of the Federations of Domestic
\nPrivate Banks, Gunarni Soeworo, said on Monday it would not make
\nmuch difference whether the supervisory function was retained by
\nthe central bank or handled by a new independent body.<\/p>\n
She stressed that what matters is the effectiveness of the
\nsupervision.<\/p>\n
The deputy chairman of the federation of national private
\nbanks (Perbanas) Wibowo Ngaserin said, \"I think what's more
\nimportant is good governance\".<\/p>\n
A banking analyst with a securities firm said that as the bank
\nsupervisory function would have a \"policeman's role\" to ensure
\nthat the country's banking population doesn't violate the banking
\nregulations, it must maintain public credibility by showing that
\nno well connected businessmen can meddle with its work.<\/p>\n
Bank Indonesia has lost its credibility as its decisions have
\nbeen frequently undermined by political intervention,
\nparticularly with the delay of banking closures in February,
\nwhich raised speculation that powerful people had worked to
\nprevent certain banks from going down.<\/p>\n
The weekly Kontan reported in its latest edition that the
\ncentral bank had paid about Rp 60 billion (US$6.8 million) to
\nHouse members to keep the banking supervisory role within the
\ncentral bank.<\/p>\n
In a joint conference with the House's special team on the
\ncentral bank bill on Monday, Sjahril flatly denied the report.<\/p>\n
\"It's absolutely not true. It's slander,\" he said, adding that
\nsuch a report was detrimental to government confidence-building
\nefforts. (rei)<\/p>",
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"sponsor": "Okusi Associates",
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