House warned against delays in appointing new BI governor
Dadan Wijaksana The Jakarta Post Jakarta
Bankers warned the House of Representatives (DPR) against delaying the appointment of a new Bank Indonesia governor because it would undermine confidence in the domestic financial market.
The Association of State Banks (Himbara) and the Federation of Private Domestic Banks (Perbanas) said that timing would be of great importance to secure market confidence, meaning sooner would be better than later.
"It's all about timing. We cannot afford to encounter any further delays because it would ruin market confidence," Himbara deputy chairman Saifuddien Hasan told a hearing with House Commission IX for financial affairs on Wednesday. Perbanas officials also attended the meeting.
The commission is in charge of selecting the governor.
The hearing was held as part of efforts to garner as much input as possible from the public in the ongoing process to select a person for the top post at the country's highest monetary authority.
President Megawati Soekarnoputri has nominated three people for the post. They are former senior officials of Bank Indonesia Burhanuddin Abdullah and Cyrillius Harinowo, and deputy governor Miranda Goeltom. The list of names was sent to the House three months ago.
The winning candidate will replace incumbent Governor Sjahril Sabirin, whose tenure ends on May 17. Sjahril has been holding the post since 1998, a year before Bank Indonesia became an independent central bank.
Based on Law No. 23/1999 on Bank Indonesia, the President's list of candidates would have to undergo a fit and proper process conducted by House Commission IX.
However, despite receiving the list in early February, the fit and proper test has yet to take place, giving rise to the concern that the whole process may not be completed by the time Sjahril's tenure ends, which is in less than two weeks.
According to the law, that would lead to the extension of the incumbent officer's term.
The delay could well have the potential to shake the confidence of financial market players. There have been many occasions in the past where lawmakers delayed key government economic programs due to various problems that create uncertainty.
But Commission IX chairman Max Muin said that an extension of Sjahril's term would not be necessary as the commission had pledged to finish the selection job before May 17.
"I can assure you that we will complete the fit and proper test on the three candidates before May 12 because we've already scheduled a plenary meeting for the next day to report the commission's choice.
"So, before May 17, or the day that Sjahril's tenure ends, we will have the name of his successor," Max told the hearing, at which Bank Indonesia's employees association was also present.
When each banking association was asked which candidate they hoped would become the next Bank Indonesia governor, they refused to give a clear answer, saying that based on the market's response, all three candidates were seen as market friendly.
Economists have warmly welcomed the nominations, saying that not only are they all regarded as professionals and have a good track record in managing the monetary policy, but none of them are politicians.
However, there are reports which suggest that the fight for the top Bank Indonesia post will likely be between Miranda Goeltom, who is backed by Megawati's Indonesian Democratic Party of Struggle, and Burhanuddin, who is supported by Vice President Hamzah Haz's United Development Party and other smaller Muslim- based political parties.
Reports said that the winner would depend on which person would be supported by the Golkar Party, which had unsuccessfully asked Megawati to include other names on the list of candidates.