House expects revised central bank law soon

JAKARTA (JP): The House of Representatives expects to finalize amendments to the central bank law during their next sitting, which will run from mid-August to November, a legislator said on Tuesday.

Muhaimin Iskandar of the National Awakening Party (PKB) faction said that legislators planned to resume the debate on the government-proposed changes to the central bank law next month after the House's recess.

"There are a lot of things that need to be discussed but everything has to be finalized during the next sitting," Muhaimin said after chairing a meeting of the House's consultative body, which, among other things, discussed the schedule for the debate on the central bank law.

The government was earlier pessimistic that the new central bank law would likely be enacted before December.

The government said in a draft of the letter of intent on reform measures addressed to the International Monetary Fund (IMF) that the planned amendments to the central bank law required further discussion with legislators and the fund.

"The government of Indonesia, in consultation with the House has decided that more time is needed -- at least six months -- to study the options for revising the law," the government said in the draft dated July 11.

But Muhaimin asserted that the amendments to the central bank law must be completed by the conclusion of the next sitting.

He gave no reason why a deadline was necessary.

Legislators will go into a one-month recess on July 23, during which they will prepare for the People's Consultative Assembly's special session slated for Aug. 1.

Plans to amend the central bank law first surfaced last November amid a demand from President Abdurrahman Wahid to reshuffle Bank Indonesia's board of governors.

The President argued that the reshuffle would rid the central bank of its corrupt practices of the past. He has repeatedly stated his intention to remove Bank Indonesia Governor Sjahril Sabirin.

Sjahril, however, defied the President's demand, and has refused to resign.

The row between the two subsequently led to the arrest of Sjahril early this year on charges that he was involved in the Bank Bali financial scandal in 1999. But Sjahril persisted on holding onto his position at Bank Indonesia.

Both legislators and the government expect to complete the amendments to the central bank law in December or early this year.

But due to pressure from the IMF, they postponed the revision to an as of yet unspecified date.

The IMF has been opposed to several clauses in the proposed amendments, especially those on firing the entire board of governors, arguing that they would compromise the hard-won independence of Bank Indonesia.

Observers have suspected that the government used the planned amendments mainly as a way of removing the legal barrier that has been preventing the reshuffle of Bank Indonesia's board of governors.

According to the central bank law, a member of the bank's board of governors cannot be replaced unless he or she has been proven to have committed a crime, has been incapacitated or voluntarily resigns.

The government later agreed to include the recommendations from an IMF-appointed panel of experts in the proposed central bank law changes.

"We must listen to what the IMF has to say, but the House doesn't consider the IMF to be a big deal," Muhaimin continued.

He said the government and the House had yet to agree on several articles in the proposed revision of the law.

"We have disagreements on a number of articles, including Article 75," Muhaimin said of the article which guarantees the independence of Bank Indonesia governors. (bkm)