House expects revised central bank law soon

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)