Thu, 30 Nov 2000

House allows government's proposal to amend central bank law

JAKARTA (JP): The House of Representatives on Wednesday approved the government's proposal to amend the central bank law, but called for a more comprehensive adjustment than the proposed articles to reshuffle the bank's board of directors.

Most factions welcomed the amendment of Law No 23/1999 on Bank Indonesia (BI), on the grounds that the independence given to the central bank was too absolute.

"... Law No 23/ 1999 has given Bank Indonesia a status of extreme independence," the Indonesian Democratic Party of Struggle (PDI-P) said in its general position during the House plenary session.

Under the existing law, BI's board of governors could not be replaced unless they are found guilty of a crime, become incapacitated or voluntarily resign.

"That meant that if they (BI's governors) didn't perform at all, worked at their leisure, or spent most of their time playing golf, they could not be dismissed," the faction said.

PDI-P was in strong agreement with a government proposed article that would allow the House to fire members of BI's board of directors should they fail in their duties.

The faction also expressed interest in granting members of political parties a chance to be appointed as the central bank's governor.

"Why is it that members of the House of Representatives, who are members of political parties, are prevented from becoming a member of the board of directors," he said.

Some analysts said that the proposal to amend the central bank law was done merely to make it possible to replace BI's current governor Sjahril Sabirin.

Sjahril has been under house arrest since June, for his alleged role in the Bank Bali scandal, which involved high- ranking officials of former president B.J. Habibie's administration. But so far, Sjahril has denied all wrongdoing and has resisted pressure to step down.

The Golkar Party warned against narrow arguments behind the calls for the amendment of BI's law.

Golkar felt the clause allowing the dismissal of a member of the board of governors if he or she had not been active for three consecutive months, was specifically designed to get rid of Sjahril.

The faction then called on the government to consider the urgency of amending the present central bank law.

"It (the amendment) gives the impression that we can very easily change something which is legal and formal," the Golkar faction said.

It further suggested that a more comprehensive approach be taken in amending the central bank's law.

The government submitted the amended bill on Monday and hoped that the amendment could be passed by the House by Dec. 16 to allow the appointment of the BI board of governors before the House recessed.

The People's Awakening faction said that despite the guaranteed independence, the central bank was still prone to interference from the government.

Only the United Development Party (PPP) rejected the government proposal.

"After evaluating the amendment proposal on Bank Indonesia law, the faction considers the proposal as too partial, incomplete and too narrow," PPP said.

The faction demanded the government submit a more comprehensive amendment before moving ahead with discussions.

Coordinating Minister for the Economy Rizal Ramli said the government was prepared to draft a more comprehensive proposal.

"Our economic team is ready to work, if necessary 24 hours a day," he told reporters after the plenary session.

He said that the government could also extend its Dec. 6, deadline if the House agreed. (bkm)