President Joko “Jokowi” Widodo has called on the Financial Services Authority (OJK) to step up its supervisory role to maintain market confidence and better protect investors as it comes under scrutiny in relation to several high-profile financial mismanagement cases. In his remarks delivered on Friday evening at the OJK’s annual financial services industry meeting, Jokowi stressed that there should be no illegal practices and fraud transactions that could inflict financial losses to investors in the future. “OJK supervision must show its fangs and maintain its credibility and integrity,” the President said. “We must develop an internal system with international standards to boost the confidence of international [investors] in our financial industry.” Jokowi’s statement comes as investors suffered hefty losses last year due to illegal practices by certain market players, such as PT Jouska Financial Indonesia. The financial advisory firm faces allegations of illegal stock brokerage and investment mismanagement that has caused combined losses of at least Rp 18 billion (US$1.28 million) for dozens of clients.
Earlier in late 2019, state-owned insurer PT Asuransi Jiwasraya became embroiled in an investment mismanagement and corruption scandal over investing a chunk of its premium funds in pump-and-dump stocks that resulted in state losses of Rp 16.81 trillion up to January 2020. The Attorney General’s Office (AGO) named a former OJK official and several businesspeople as suspects in the Asuransi Jiwasraya corruption trial. In July 2020, Jokowi was reportedly mulling over the idea of returning the banking supervisory role to Bank Indonesia (BI) due to his dissatisfaction with the OJK’s performance during the COVID-19 health emergency. But in Friday’s remarks, the President highlighted the “extraordinary” collaboration between the OJK, BI, the Finance Ministry and the Indonesian Deposit Insurance Corporation (LPS) in maintaining financial stability amid the coronavirus-induced economic recession in the third quarter of 2020. He also expressed the government’s hope that the collaboration would continue this year. The government and the House of Representatives are currently drafting an omnibus bill on the financial sector. According to a draft seen by The Jakarta Post, the bill is to mandate the establishment of a banking supervision forum to assess the overall performance of the country’s banks, with its members to be drawn from the central bank, the OJK and the LPS.
The draft bill also stipulates the establishment of two “supervisory councils” to oversee, evaluate and improve the OJK’s performance and accountability. Meanwhile, the OJK on Friday launched its 2021-2025 Indonesian financial services “master plan”, primarily to support economic recovery and to address underlying structural issues in the country’s financial markets. “We realized that the year 2021 will still be full of challenges. This master plan aims to address the short-term pain from the COVID-19 pandemic and other structural challenges to create a competitive and inclusive financial services sector,” OJK chairman Wimboh Santoso said during Friday’s annual meeting. The OJK would extend loan restructuring to 2022 for debtors affected by the pandemic to support recovery, he said. Wimboh also added that the authority would also provide sovereign rating for the country’s newly established sovereign wealth fund, the Indonesia Investment Authority (INA), to speed up economic growth.
Furthermore, the OJK would relax several policies, including its risk-weighted assets (ATMR) policy for property and vehicle loans, as well as for loans in the healthcare sector. The authority would also improve financing access for micro, small and medium enterprises (MSMEs) and expand the digital ecosystem for MSMEs. Wimboh added that the OJK was also committed to accelerating consolidation in the financial industry by implementing a minimum capital policy, among several other planned policies. It expected loan disbursements to grow 6.5 percent to 8.5 percent and third-party funds to expand between 10 and 12 percent this year, said Wimboh, all to support economic growth. “We are optimistic that these policies will help us boost the role of financial services in the economy,” he said.
