ASEAN KEY DESTINATIONS
Financial safety net bill almost ready
The Indonesian government is finalizing the long-awaited financial system safety net (JPSK) bill to protect the economy during financial crises.
At a press briefing on Monday, the finance minister said the bill would soon be submitted to the House of Representatives so it could be deliberated on during the Aug. 16 to Oct. 28 session.
“We are working to get the JPSK bill ready soon, as capital inflows to Indonesia have been huge,” he told reporters at his office in Jakarta.
Billions of dollars from foreign investors have been pumped into the financial market this year thanks to Indonesia’s economic resilience amid the global slowdown. However, international financial agencies have warned that a sudden reversal of the short-term foreign funds would shock the financial system.
The JPSK bill will ensure that people’s money is secure in times of crisis, not only money held in banks but also in pension funds and insurance, Agus said.
Subject to the President’s approval, he added, there may be a financial safety net forum (FSSK) comprising the finance minister, the Bank Indonesia governor, Indonesia Deposit Insurance Corporation (LPS) chairman and the yet-to-be-established Financial Services Authority (OJK) chairman.
“We are proposing for the forum to be given authority to make policy decisions during emergencies in the financial system because we have to move quickly, effectively and appropriately,” Agus said.
According to Agus, the JPSK bill will “complete the existing crisis management protocol”, which has been managed in a memorandum of understanding with the Finance Ministry’s debt management office and capital market watchdog, the central bank and the LPS.
Economists have called for firm fundamentals from the government to secure the financial market, as the recent turmoil global financial market over fears of recession in Europe and the United States showed signs of moving towards global market volatility.
The bill would be a revision of a similar bill submitted to the House in early 2009.
Former finance minister Sri Mulyani Indrawati, now a World Bank managing director, proposed a financial safety net bill to the House in 2009 which was rejected, as House members demanded to be involved in the decision-making processes during a crisis.
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