OJK Defends Its Levies Imposition Policy

Agus Sahbani, Christina Desy
 
Since the economic crisis in 1997, the government has had a vision of forming an independent body to assist Bank Indonesia (BI) and the Capital Market and Financial Institutions Supervisory Board (Bapepam-LK) to regulate and supervise the activities of financial institutions to achieve better economic growth.
 
This vision was finally realized under Law No. 21 of 2011 on the Financial Services Authority (“OJK Law”), as the legal basis for the formation of the Financial Services Authority (OJK). Despite this vision, even before its inception questions and doubts were raised about the OJK’s ability to solve micro-prudential financial issues. These doubts continue to date, and one view is that the OJK has failed to effectively perform its functions.
 
This skepticism and negative sentiment further increased with the issue of Government Regulation No. 11 of 2014 on Levies by the OJK (“Regulation”). The Regulation implements Article 37 of the OJK Law on the imposition of levies on banks and non-bank financial institutions.
 
Seeing the levy payment obligation as burdensome, the Defense Team of Nation Economic Sovereignty (Tim Pembela Kepentingan Ekonomi Bangsa – TPKEB) submitted a judicial review petition to the Constitutional Court to annul Article 37 of the OJK Law. TPEKB has also requested for the annulment of Article 1 (1) and Article 5 of the OJK Law regarding the OJK’s independence, as well as its regulatory and supervisory functions.
 
TPEKB is arguing that the OJK violates Article 23D and Article 33 of Indonesian Constitution with its independence, because such independence should only be held by BI as the central bank. Furthermore, TPEKB argues that the OJK is prone to conduct that could be a moral hazard because its holds integrated authorities covering all activities in financial industries.
 
Supporting TPKEB, Syamsul Hadi, Lecturer of Social and Political Studies at Universitas Indonesia, asserts that that the OJK was established to satisfy the interests of foreign parties, such as the World Bank, International Monetary Fund, Asian Development Bank, and also foreign investor countries. The underlying purpose behind the OJK it is argued, is to strengthen the liberalization of global financial markets based on neoliberal ideologies to decrease the state’s role in determining Indonesian economic policy.
 
Responding to these views, Muliaman Hadad, Chairman of the OJK, claims that none of the petitioned Articles are non-constitutional. Firstly, Mr. Hadad explained that BI only transferred some of its authorities to the OJK. Therefore, the OJK is permitted to be independent in performing its function as a regulator and supervisor. Rather than a violation, he is of the view that the OJK’s activities are in line with Article 23D of 1945 Constitution, under which BI still has its own functions and authorities.
 
As for the levies, Mr. Hadad stated that their imposition complies with the procedures required by Article 23A of Indonesian Constitution, which requires they be incorporated under a law. In addition, the levies are also reasonable because the OJK provides services that benefit financial industries. To that extent, the levies will be used as a source of funds that reduces the OJK’s operational budget allocation from the State Budget.
 
Responding to concerns of misuse, Mr. Hadad says that OJK Law mandates the OJK apply and maintain principles of accountability. Under these principles, the relevant stakeholders are able to observe the flow and use of levies as there will be an audit by the State Audit Board (BPK) and public accountants.
 
Based on the above, Mr. Hadad is requesting the Constitutional Court to reject the petition.
 
(hot/kc)