OJK Needs Strong Commitment to Respond to Public Challenges

KOMPAS/ALIF ICHWAN

The busyness of officers and visitors at the Financial Services Authority Office, Jakarta, some time ago.

The Financial Services Authority needs to further strengthen the regulation and supervision of the financial-services industry in a more integrated manner. For that, an internal transformation is required.

JAKARTA, KOMPAS — The Board of Commissioners of the Financial Services Authority (OJK) needs to be more proactive in strengthening its position in regulating and supervising the financial-services industry for the period of 2022-2027. OJK also needs to continue to strengthen efforts to protect customers of financial services.

On the one hand, the financial-services industry needs to be encouraged to grow in a healthy fashion. It is needed in efforts to accelerate economic recovery and to strengthen the digital economy and sustainable finance.

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On the other hand, OJK must be careful in mitigating the risk of the impact of high inflation and the global recession on the financial-services sector and the Indonesian economy. Therefore, OJK and the Finance Ministry, Bank Indonesia and the Deposit Insurance Corporation (LPS) must be able to work closely together in the Financial System Stability Committee (KSSK) forum.

Speaking at a press conference after the inauguration of nine members of the OJK Board of Commissioners for 2022-2027 at the office of the Supreme Court in Central Jakarta on Wednesday (20/7/2022), the chairman of the OJK Board of Commissioners Mahendra Siregar emphasized OJK's commitment to solving these challenges.

This includes compliance with the principles of compliance and good governance.

The OJK Board of Commissioners will strengthen the regulation and supervision of the financial-services sector, including in banking, capital markets and the non-bank financial industry (IKNB). This includes compliance with the principles of compliance and good governance.

As an initial step, OJK will further encourage a one-stop-shop system for licensing, ratification and approval with faster services while still adhering to the precautionary (prudential) principle.

"This is very much needed and eagerly awaited by all industry players as well as the consumers of the Indonesian financial services, which have tremendous potential to develop in the future," said Mahendra.

A good performance in the financial-services industry would contribute significantly to the growth of the real sector, including micro, small and medium enterprises (MSMEs) amid the threat of a crisis. It also plays a decisive role in increasing employment and people's purchasing power.

KOMPAS/ABDULLAH FIKRI ASHRI

Signs still hang in front of a closed salted egg shop on Wednesday (13/6/2018) along the northern coastal road (Pantura) in Brebes regency, Central Java. The shops started closing last year when part of the Trans-Java toll road opened. Micro, small and medium enterprises (MSMEs) along Pantura, such as the salted egg businesses, went bankrupt when motorists switched to the toll road.

Regarding banking supervision, Dian Ediana Rae, the chief executive of OJK banking supervision, emphasized that the banking sector would continue to improve its efforts in promoting post-pandemic-economic recovery and growth by making a banking supervision system that is responsive to challenges and changes in the domestic and global-financial ecosystem.

Inarno Djajadi, as the chief executive of the Capital Market Supervision, said OJK was committed to continuing to encourage market-deepening efforts and increasing the number of companies listed on the stock exchange as well as people investing in the capital market.

Prevention

Another member of the OJK Board of Commissioners, Friderica Widyasari Dewi, said that OJK would further increase efforts to prevent consumer and public problems by providing information and education on the characteristics of the financial-services sector, services and products. The OJK is also authorized to monitor the behavior of financial-services business actors to protect consumers.

In addition, efforts must be made to optimize the financial-technology industry for peer-to-peer lending (P2P lending) and encourage the acceleration of non-performing insurance settlements.

Regarding the supervision on non-bank financial industry or IKNB, Ogi Prastomiyono, as the chief executive of IKNB Supervision, said OJK would encourage the resolution of insurance-product disputes related to investment (PAYDI/unit link) and improvement of health-insurance arrangements. In addition, efforts must be made to optimize the financial-technology industry for peer-to-peer lending (P2P lending) and encourage the acceleration of non-performing insurance settlements.

To surmount these various challenges, OJK also needs to fortify its organization. Related to that, OJK deputy chairman Mirza Adityaswara said, "We will continue to make more and more improvements, as well as transform internal behavior, namely to be more collaborative, proactive and responsible in establishing a more integrated supervisory arrangement."

The Board of Commissioners for the 2022-2027 period has also agreed to prioritize the collective collegial principle in decision making. This is deemed important in strengthening the capacity of OJK in carrying out integrated regulatory, supervisory and protection tasks.

The inauguration and oath-taking ceremony of members of the OJK Board of Commissioners for the period 2022-2027, on Wednesday, were carried out in accordance with Presidential Decree (Keppres) No. 51 of 2022 concerning the dismissal and appointment of membership to the OJK Board of Commissioners.

KOMPAS/ELSA EMIRIA LEBA

Logo Bank Indonesia

In addition to Mahendra, Mirza, Inarno, Dian Ediana Rae, Ogi, Friderica and Sophia Issabela Watimena were also sworn in as chairs of the OJK audit board, as well as Doni Primanto Joewono, a member of the ex-official board of commissioners from Bank Indonesia, and Suahasil Nazara, an ex-official from the Finance Ministry.

Homework

Contacted separately, the research director of the Center of Reform on Economics (CORE) Indonesia, Piter Abdullah, said that there was a pile of homework that the new OJK leaders had to complete, such as those related to efforts in maintaining stability amid the threat of a global crisis that would also impact Indonesia.

There needs to be a joint effort to carry out synergistic supervision of the banking cluster, IKNB and the capital market.

In the regulatory body of the financial-services industry, Piter said, it was also necessary to carry out a transformation to optimize industrial supervision. There needs to be a joint effort to carry out synergistic supervision of the banking cluster, IKNB and the capital market.

“It is necessary to change the policymaking system at the OJK Board of Commissioners. They shouldn't be a petty kingdom in their [respective] field of supervision. Supervision must be integrated, not separated from one sector to another,” said Piter.

In addition, continued Piter, there is still a lot of homework, specifically in the insurance industry, to resolve the cases of Jiwasraya Insurance, Asabri, Bumiputera Life Insurance, Kresnalife, Wanaartha Life and others.

The same thing was also stated by insurance-observer Irvan Rahardjo. He asked the OJK Board of Commissioners to encourage the acceleration of the formation of the Policy Guarantee Agency. OJK also needs to improve the governance of the insurance industry, which is still considered weak. (BKY)

(This article was translated by Hendarsyah Tarmizi).