Amendment of law on BI delayed
Amendment of law on BI delayed
Dadan Wijaksana, The Jakarta Post, Jakarta
The government acknowledged on Monday that some contentious
issues on the proposed amendment of the central bank law remain
unsettled.
This was apparently the reason why the passage of the bill on
the amendment, initially scheduled for Monday, had been delayed
indefinitely by the House of Representatives, as its special
committee in charge of the matter had requested additional time
to settle the unfinished issues.
Director General for Financial Institutions at the Ministry of
Finance Darmin Nasution who also is leading the government team
in the discussion with the committee, conceded that the
deliberation talks had hit several snags on a number of issues.
"There are a few (problems), but the basic ones center
probably on Bank Indonesia's board of governors and its
supervisory board, aside from stressing its function as the
lender of last resort," Darmin said.
The bill in question, which has been on the table for almost
two years between the government, Bank Indonesia and the House,
will allow the amendment of law No. 23/1999 on central bank
activities.
The deliberation was also put on hold at the height of the
political confrontation between then president Abdurrahman Wahid
and legislators several years ago.
At that time, the proposed bill was widely believed to be one
of the government's efforts to oust then governor Sjahril Sabirin
and his deputies, which sparked criticism as the move was deemed
as putting the central bank's independence in danger.
Elsewhere, Darmin said that among all the unfinished issues,
the planned establishment of a supervisory board at the central
bank was the hardest nut to crack.
"We still have differences on that, but not on the substance.
It's more of how it operates and all the related mechanisms," he
said.
He said the board would focus on setting up a control
mechanism to supervise and monitor the performance of the central
bank's board of governors.
"The board will handle the accountability of Bank Indonesia's
board of governors."
Darmin did not elaborate on the reasons for setting up such a
supervisory board, but the fact remains that the current central
bank law puts the status of each member of Bank Indonesia's board
of governors so high that they are very difficult to replace.
There are only three ways for them to be replaced: resignation,
incapacitation or tenure expiration.
As for the Bank Indonesia's board of governors itself, Darmin
also pointed out some issues of contention.
"The government wants revision to the current law, especially
on a clause on selection of candidates for Bank Indonesia
governor. While the current laws allow the president to nominate
up to three names, we want it to be just one," he said.
The move is widely seen as a way to minimize unhealthy
competition -- even avoid illegal practices such as bribes --
among candidates.
Given the variety of the issues to be settled, it is unlikely
that the talks will be completed anytime soon.
Another hot issue that could take time is Bank Indonesia's
stance over the establishment of the Financial Services Authority
Institution, which will also be included in the amendment bill.
The institution will take over the role of Bank Indonesia in
supervising the banking sector, something that many view as the
reason behind its reluctance to accept the concept.