Govt ready to submit FSAI draft law to the House<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
President Megawati Soekarnoputri has issued a decree stipulating
\nthat the draft law on Financial Services Authority Institution
\n(FSAI) is ready to be submitted to the House of Representatives
\nfor deliberation.<\/p>\n
A source at the Ministry of Finance said that the ministry
\nplanned to submit the draft law to the House on Monday.<\/p>\n
The government has planned to set up the FSAI, which would
\nserve as the top watchdog of the country's financial services-
\nrelated industries. The institution would take over the
\nsupervisory role of the central bank, and similar roles in the
\ncapital market, insurance and pension service industries.<\/p>\n
The finance ministry, which is in charge of setting up the
\ninstitution, expects the House to complete the deliberation of
\nthe draft law later this year, so that the FSAI would be fully
\noperational by 2006.<\/p>\n
However, Bank Indonesia has called for a delay in setting up
\nthe FSAI.<\/p>\n
Earlier this week, central bank Governor Burhanuddin Abdullah
\nmet with House leaders to seek political support for its demand.<\/p>\n
Burhanuddin said that preparations to set up an effective FSAI
\nwould take between five to 10 years.<\/p>\n
He added that the country's financial service industries,
\nparticularly the banking sector that has just started to recover
\nfrom the late-1990s financial crisis, was still financially weak
\nto contribute to the financing of the FSAI.<\/p>\n
The transfer of the banking supervisory role to the FSAI would
\nallow Bank Indonesia to solely concentrate on monetary affairs as
\nstipulated by the central bank law.<\/p>\n
On Thursday, following a meeting with Vice President Hamzah
\nHaz, Burhanuddin reiterated there was no urgency to set up the
\nFSAI, saying that the condition was untimely.<\/p>\n
The impetus to set up the FSAI came amid increasing challenges
\nfacing the financial services industry in the fast-changing
\nglobal economy.<\/p>\n
The establishment of the FSAI is also important because of the
\ndeep-rooted conglomeratic practice in Indonesia, as is evident in
\nthe cross-ownership between the financial service industry and
\nthe real sector.<\/p>\n
The late-1990s banking crisis has been partly attributed to an
\nabuse of power by bankers, who transferred depositors' money to
\naffiliated business groups without proper assessments.<\/p>\n
\"It would be more effective if the supervision of the
\nfinancial sector is under a single institution,\" said an industry
\nexpert.<\/p>\n
\"The essence of the FSAI is that it promises better and
\nintegrated supervision. So, for the insurance industry, any
\nagency that can help the industry grow is good,\" Angger Yuwono,
\nchairman of the Association of Indonesian Life Insurance
\nCompanies (AAJI) told The Jakarta Post.<\/p>\n
However, Angger stressed that the FSAI should be well-prepared
\nin its concept, operation and organization, as it will have a
\nprofound impact on the financial services industry.<\/p>\n
\"Because once the damage done, it will be hard to undo,\" he
\nsaid.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-ready-to-submit-fsai-draft-law-to-the-house-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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