MONETARY SERVICES AUTHORITY NEEDS TO BE SET UP

Although many people believed that Monetary Services Authority (OJK) was not necessary for Indonesia, Minister of Finance Agus Martowardojo believed that OJK was necessary because it was mission of the Law. Agus stated that making of the OJK Law Proposal was a message ingrained in Bank Indonesia Law Article 34 point 1 which stated that OJK must be formed by December 31, 2010 at the latest. “OJK is already ingrained in Law of 1999, where it is stated that in one of the articles of the BI Law that OJK has to be established” the Minister of Finance underscored; further he assured that he would legislate the Law Proposal because it was a law to be implemented.

Sometime ago a member of the Presidential Advisory Board Jimly Asshidiqie stated that it was not necessary for Indonesia to form a Monetary Service Authority (OJK) which was a waste of money while the effectiveness was doubtful in reforming the banking supervisory system and other financial institutions “I am more inclined not to support this proposition, but the problems that the law has stipulated that the OJK must be formed before December 31, 2010,” Jimly remarked after a discussion with the Association of Indonesian Economists (ISEI) in Jakarta.

Jimly stated that formation of this institutions had been suspended twice, namely in 2002 and again in 2010 “This means we can shift it, in that case let’s decide to change the stipulation, we don’t have to set up the OJK, I believe this is the safest way” he stated. According to Jimly, formation of the supervisory body of financial services was in line with article 34 point (1) Law no 3/2004 on Bank Indonesia and must be viewed cautiously considering its great impact on Indonesia’s economy if the formation of the body did not run smoothly.

“We must be careful because the European crisis can have its global impact. Let us not do something which has its systemic impact that needs a transition period, and suddenly there is a crisis which we have to face, so let’s be cautious” Jimly stated and he further remarked that OJK might be right but we should consider the time factor and the development which occurred over the period of 1999-2010. The idea of setting up OKJ in 1999 must be re-evaluated in view of the experience an circumstances because probably what was just a measure to strengthen Bank Indonesia in the effort to improve the internal control mechanism.