Experts Confirm OJK?s Constitutionality

 
Christina Desy, Agus Sahbani
 
While aimed at keeping the development of the national financial services industry on the right track, the existence of the Financial Services Authority (OJK) is not generally welcomed. This was evident when the OJK’s status as the independent supervisor of the financial sector was challenged at the Constitutional Court last February by the activists from the National Economic Sovereignty Defense Team (Tim Pembela Kedualatan Ekonomi Bangsa – TPEKB).
 
Responding to the petition, the OJK presented experts before the Constitutional Court clarifying OJK’s status as constitutional, including its independency and authority to collect levies. These experts included Professor Yuliandri from the Faculty of Law Universitas Andalas and Professor Nindyo Pramono from the Faculty of Law Universitas Gajah Mada.
 
Professor Yuliandri explained that Law No. 12 of 2011 on Establishment of Laws and Regulations allows a law to be issued based on delegation under another law, not only based on the 1945 Constitution. In this case, Law No. 21 of 2011 on the OJK (“OJK Law”) was issued by a mandate under Article 34 (1) of Law No. 23 of 1999 on Bank Indonesia.
 
“By that, the issue of the OJK Law was valid and the law cannot be measured merely based on the 1945 Constitution,” Professor Yuliandri explained during proceedings on Monday.
 
As for the levies, Professor Yuliandri emphasized that the OJK is an independent institution which not only functions for the public, but also for the private sector in the financial industry. With this capacity, it is reasonable for OJK to impose certain levies on the financial services providers. Additionally, the levies are imposed in accordance with prevailing laws and regulations, initially under the OJK Law then enforced with the issue of a governmental regulation.
 
Supporting Professor Yuliandri’s opinion, Professor Pramono said that the levies are in line with Article 23A of the 1945 Constitution, which mandates mandatory taxes or levies be regulated under a law. Furthermore, Professor Pramono stated that the imposition of the levies implements the mutual aid and amicable principles incorporated under Article 33 (1) and (4) of the Indonesian Constitution.
 
“Under the constitution, financial businesses must jointly fund the monitoring system over financial institutions to reduce state expenditure,” Professor Pramono elaborated during the same proceedings.
 
Put simply, Professor Pramono sees the imposition of levies as a common practice in the financial industry. For instance, the Indonesia Deposit Insurance Corporation (Lembaga Penjamin Simpanan - LPS), also imposes certain premiums on banks as regulated under Law No. 24 of 2004 on LPS.
 
Professor Pramono believes that the OJK was established constitutionally and it has the proper authority to maintain its monitoring of banks and non-bank financial institutions, as well as the capital market.
 
The challenge against OJK’s constitutionality and authority submitted by TPEKB also addressed OJK’s independence and functions, as well as its levies. The challenge was executed by a review of Articles 1 (1), 5, 6, 7, 37, 55, 64, 65, and 66 of the OJK Law.
 
According to TPEKB, OJK’s independency was unconstitutional, as the 1945 Constitution only mandates and recognizes the central bank, i.e. Bank Indonesia, as the sole institution that has such independence, not the OJK.
 
Moreover, it was argued that the OJK has excessive powers with its monitoring and regulating authorities over the financial industry, and poses a potential risk of being uncontrollable and misused. TPEKB also objected to the imposition of OJK levies. Not only unconstitutional, TPEKB said that the imposition is unclear in regard to its allocation and connection with the state budget and may affect OJK’s independence.
 
(hot/kc)