Amidst the process of election and selection of the Board of Commissioner of the Authority of Financial Services (OJK) now a small but serious problem appeared about retribution of financial board by OJK to OJK.
A polemic emerged starting with a question where the financial resource was from which OJK would take money to run operations. Loosely opinions came up that retributions for OJK would be taken from players of the financial industry.
Rejections busted out to that proposition: was it a proper thing to let the control board (OJK) be financed by monetary institutions? Wasn’t it improper and unethical? Certainly it would be impossible for the controlling board to put sanction on players of the financial industry who financed their operations.
Further an interesting proposition came up from the Association of National Public Banks (Perbanas) who proposed there should be two sources of operational fund. According to Perbanas, during initial phase of OJK set up, operational fund would be taken from the State Budget (APBN) first, thereafter players of the monetary service sector would obliged to pay retributions for OK operations.
The proposition was interesting because in the banking industry, retribution was uncommon. So far the banking industry, retribution was uncommon. So far the banking sector was controlled by Bank Indonesia free of charge. Understandable because BI could finance their own operations. Probably in the stock market retributions were commonplace but perhaps also uncommon.
Therefore Perbanas proposed two alternatives or two sources of financing for OJK operations. The fist sources of financing for OJK operations. The fist source was the State Budget for Bank Indonesia of the controlling division handed over to OJK. So Bank Indonesia was expected to “share authority” with OJK because the role of controlling was no longer fully in the hands of BI.
The second alternative source was premium of the Board of Deposit Insurance (LPS). Meaning if LPS premium had arrived at a certain amount it could be partly transferred to OJK. So far LPS premium had come to trillions of Rupiah. If premium had arrived at a certain figure, LPS could share financing with OJK.
All the uproar about OJK operational expenses showed that as the proposition to set up OJK appeared that as the proposition to set up OJK appeared one thing was overlooked how to finance OJK operations. OJK proposers were narrow minded in the sense that they emotionally urge to establish OJK until they forgot how to support their operational expenses.
Now only after a political decision was made about OJK was made came up the question how to finance OJK operations. Bad but better late than never. About the two options proposed by Perbanas, surely the Government as sponsor of OJK establishment should respond to the matter promptly to keep it from long and dragging.
In line with selection process of candidates of the OJK Board of Commissioners it would be advisable that the financing problem or OJK operations be settled by 2013. By that time OJK would be operational with dissolved Bapepam and Financial Institutions and to be followed up by inclusion of BI controlling function by BI one year later.
It was possible that is OJK financing be thought over by the Board of Commissioners formed this October. But it would be much better that before the Board of Commissioners was appointed, financial source would be stipulated by OJK.
One of the two Perbanas options were worth considering. It was still possible for the Government to make their own calculations and further to announce to the financial industry so they could respond accordingly before the rules were put in effect.
The important thing was that the final stipulation had overall support and approval from all stakeholders, so the budgeting for OJK operations would no longer pose as a problem. Among the financing resource which could probably be used was carry over budget of the previous year (silpa).
The important thing was to avoid conflict potential between OJK as controlling agent and players of the financial industry being controlled. Use of budget by OJK must adopt the principles of TARIFF (transparence, accountability, responsibility, Informative and Fairness). Therefore examination of by the Board of Financial Examination (BPK) as auditor became imperative.
Business News - February 24, 2012
Business News - February 24, 2012
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