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NEWS UPDATES Asean Affairs     27 October  2011

New bank regulator for Indonesia

Indonesia’s House of Representatives on Thursday approved a long-delayed bill creating a new regulator to oversee a growing financial industry in Southeast Asia’s largest economy, part of global efforts to ward off future bank collapses.

The new regulator, to be known as the OJK, will take over the supervision of banks, brokerages and insurance firms from the central bank and capital market watchdog Bapepam-LK starting from 2013.

OJK, or Otoritas Jasa Keuangan, translates into Financial Services Authority and is modeled after UK’s FSA.

The move to create the OJK came about to avoid a repeat of the 1997/98 financial crisis which resulted in the collapse of many Indonesian banks.

Analysts say Bank Indonesia has improved banking supervision in recent years, and some were skeptical whether the OJK could do a better job at a time of global economic uncertainty caused by the festering euro zone and US debt crisis.  

“The banking sector is confused on why the OJK should be founded because Bank Indonesia’s supervision is good ... Our banks have the strongest financial indicators in Southeast Asia due to Bank Indonesia’s role,” said Juniman, an economist at Bank Internasional Indonesia (BII) in Jakarta. “This is a political decision.”

In the 2008 credit crisis, Indonesia’s banks were well capitalized and mostly escaped unscathed, though the government bailed out one small lender over fraud, creating a political storm that later brought down the then-finance minister.

Indonesia is currently the only emerging market in Asia with almost no ownership limits on banks. It is one of Asia’s most fragmented banking markets, and foreign lenders control about a quarter of the country’s outstanding loans.

The bill creating the OJK was meant to be approved last year, but lawmakers had been wrangling over the composition of its nine-member board of commissioners.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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