Prospective OJK Board Member Promotes Strengthening through Seven-Pillar Strategy

Jakarta – Agus Sugiarto, a prospective member of the Financial Services Authority (OJK) Commissioner Board, has urged the strengthening of OJK’s role through seven strategic pillars as an effort to enhance credibility and support national economic development.

Agus stated the need to reinforce OJK’s institutional capacity in line with Indonesia’s financial services industry, which has developed rapidly over the past decade.

“How can we strengthen OJK’s role as a credible and dignified authority to support national development,” said Agus during a fit and proper test before the Parliamentary Commission XI of the Indonesian House of Representatives in Jakarta on Wednesday.

Agus noted that the value of national financial services industry assets increased significantly from approximately IDR 13.2 trillion in 2014 to around IDR 34.5 trillion currently. Concurrently, the number of financial services institutions grew from approximately 3,200 entities to more than 4,000 entities.

He therefore assessed that the financial services sector is highly strategic for the national economy, particularly given the rapidly growing number of customers and the expanding financial inclusion of the population.

On the other hand, he identified several challenges facing the financial services sector, including imbalances in regulation across financial industry sectors, operational risks such as internal fraud and cyber attacks, and low financial literacy among the public.

“Cyber threats such as phishing, skimming, social engineering, and data theft are increasing and must become a priority for handling,” said Agus.

He also highlighted issues concerning capital market integrity, including the limited portion of free-float shares in several large issuers, which he assessed could affect market liquidity.

Additionally, he assessed that Indonesian public financial literacy remained relatively low despite increased financial inclusion levels, with surveys showing financial inclusion at approximately 80 percent but literacy at only around 66 percent.

“This means approximately 35 percent of the population have not truly understood financial products, making them vulnerable to fraud or illegal investment schemes,” said Agus.

In response to these various challenges, Agus proposed a seven-pillar strategy for strengthening OJK. The first pillar involves strengthening forward-looking regulation based on research and international best practices.

Second, he proposed risk-based supervision of the financial services industry leveraging big data and artificial intelligence (AI) technology to strengthen early warning systems for potential risks in financial institutions.

“With big data and AI-based supervisory technology, supervision will be more effective and risk detection can be carried out more quickly,” said Agus.

Third, he emphasised the importance of strengthening consumer protection and accelerating financial literacy, whilst fourth, he called for continuous human resource development within OJK.

Fifth, he highlighted the need to strengthen institutional infrastructure, including construction of OJK’s headquarters, and sixth, diversification of the institution’s funding sources so it is not entirely dependent on fees from the financial services industry.

Before presenting the seventh pillar, the time allocation granted by Parliament’s Commission XI expired, so Agus was unable to present it.

During the question-and-answer session, members of Commission XI asked about OJK’s strategy in supporting national economic growth and improving quality financial inclusion.

In response, Agus stressed that OJK must be part of the national development ecosystem and support government priority programmes.

He cited the example of potential development of national housing credit schemes involving all banks in the country, by expanding public access to home ownership.

“OJK cannot operate alone. OJK must be part of the national development ecosystem,” said Agus.

For information, Agus Sugiarto currently serves as Independent Commissioner of PT Danantara Asset Management (DAM) and previously worked at Bank Indonesia for 24 years, followed by work at OJK for 12 years.

Besides Agus, nine other candidates for OJK Commissioner Board membership underwent the fit and proper test conducted by Commission XI on Wednesday, 11 March.

The nine other candidates include Friderica Widyasari Dewi, Hernawan Bekti Sasongko, Ary Zulfikar, Hasan Fawzi, Darmansyah, Dicky Kartikoyono, Danu Febrianto, Adi Budiarso, and Anton Daryono.

In this instance, ten candidates were tested to compete for five available positions, including Chairman of the Commissioner Board, Vice-Chairman of the Commissioner Board, Head of Capital Market Supervision, Head of Digital Asset Supervision, and Head of Conduct Supervision of Financial Services Business Actors, Education, and Consumer Protection.