When the OJK was Rocked
Professor of STIE Perbanas
WHEN I read the news on the Reuters website on July 2, 2020, there was a feeling of shock and difficulty believing it. The sensational news is related to the transfer of bank supervision from the Financial Services Authority (OJK) back to Bank Indonesia (BI). Is this true or a hoax? If it is a hoax, how could the well-known Reuters be very careful about "cheating" spreading hoaxes? In the midst of confusion, I read repeatedly to confirm the truth of this news.
When I saw the same news in the national mass media in the morning, I finally understood the constellation. It seems that there are some parties who are dissatisfied with OJK. Then they tried to "lead" opinion to divert the supervision of financial institutions from OJK to BI. Miraculously, the source of the news was only "close people" so it was not clear who he was. Anomime for sensitive reasons. Remarkably, the President's name was "written off" so that the effect of the news was big and shocking.
It is difficult to ascertain whether the President really said what the "sources" said. However, when the President also did not immediately provide clarification, the news could be true. Adagium states when you "let" means you "agreed." It is difficult to ascertain whether the President "really wants" or only "close people" to the President who wish to shift the oversight function. I'm more sure isn't it. However, the President wanted to satisfy those around him. This reminds Dahlan Iskan's story when President SBY scolded him regarding the appointment of the president director of Bank Mandiri. "Fun" other people.
As a politician who has risen from the bottom, Jokowi must have "calculated" very comprehensively. In the current weakening economic situation, the Covid-19 pandemic is still rampant, as well as many other problems that need to be focused on resolving, it is very unsure and makes no sense if the President makes new problems. As is well known, the problem of the ineffectiveness of the cabinet's work, the recovery of the national economy, the relocation of the national capital and the twin deficits is more urgent to resolve.
It is not wise to issue thoughts of diverting the supervision of financial institutions in the midst of a crisis. The dissolution of an institution as large as the OJK is not the same as the dissolution of a commission or agency. The President has repeatedly stated that he will dissolve state institutions or the cabinet if they do not support the economic recovery program. However, OJK is a large institution whose function is very strategic. The experience of forming the OJK teaches that the process of transferring authority is neither easy nor cheap. Disbanding will also be the same. There has always been a tug of war between interests and everyone is aware that this is a political choice.
The problem of legally formal transfer of bank supervision from BI has been resolved. However, psychologically it is still not over. If the function of the OJK is transferred to BI again, the problem will also recur. The President must know how complicated it is when the Ministry of Research, Technology and Higher Education is returned to the Ministry of Education and Culture. Drag and drop positions and nomenclature cannot be resolved quickly.
If that happens to OJK, which has thousands of employees, it can be estimated that the impact will be much more complex, consuming a lot of time and money. Changes in the institutional structure without being based on the results of a thorough and in-depth study only create uncertainty. Those who pushed for the dissolution of the OJK could be "close" people whose economic interests were disturbed by the recent OJK decision.
OJK's response to the news was also quite interesting. The OJK spokesperson stated that they would not respond to these issues and would focus on carrying out their functions. Furthermore, OJK will remain active and always support government policies and according to its authority as a regulator has issued various regulations in order to support the government in handling the economic impact of Covid-19.
As we know, right now we are experiencing an extraordinary situation. Hence, the government issued a provision "sweep the universe" in the form of Perppu No. 1/2020 on March 31. This Perppu must exist because the situation is truly an emergency and all countries are experiencing it. In response to the same conditions, OJK also issued an earlier policy regarding bank credit relaxation in the form of the Financial Services Authority Regulation (POJK) on March 16.
Referring to POJK Number 11 / POJK. 03/2020, there are many facilities provided by the OJK as a stimulus for the national economy. Banks are provided with facilities in terms of credit restructuring, namely providing postponement or relief of installment payments through a credit restructuring program for a maximum period of one year without the obligation to provide provisions. In terms of the collectability assessment, it is subject to only one pillar, namely if the debtor pays only the principal or interest on the loan, then loans up to IDR 10 billion are considered as current collectibility.
If credit is restructured, the accounting treatment will not be considered as deteriorating credit quality so that reserves can be minimized. However, in the context of GCG, it is best if banks are able to continue to form reserves because in real terms the quality of credit has decreased. Without establishing a reserve, it is very dangerous if the bank records a profit and then pays taxes because in reality it is not a profit.
Even though there is economic stimulus from the government, the consequences of Covid-19 on banks are still heavy. Frankly speaking, information on current developments in bank credit conditions makes us need to be vigilant. Based on a report from the OJK, it turns out that up to this June, there has been a credit restructuring worth Rp655 trillion. With total loans as of March amounting to Rp5,781 trillion, it means that the amount of restructuring reached 11%.
The total number of customers who have received restructuring is over 6 million. Those who enjoyed this restructuring were not only MSME debtors, but also corporate debtors. Total corporate debtors who received restructuring were around 1.1 million customers with total loans reaching IDR 350 trillion. Of the approximately 12.2 million MSME debtors, around 5.2 million have the potential to require restructuring. To date, the restructured MSME debtors have reached 2.6 million with a value of Rp. 298 trillion.
This means that if the OJK is deemed not proactive in this case it is also inappropriate. Especially if you pay attention to additional stimuli such as support for interest subsidies to affected MSMEs and placement of government funds for banking liquidity in order to support the real sector, there is a contribution from OJK. Of course OJK cannot provide stimulus in the form of money. Non-money incentives in the form of relaxation of provisions for banking, if calculated, have already reached IDR97 trillion.
Frankly speaking, comparing the contribution of the OJK with the contribution of BI or the Ministry of Finance in overcoming the impact of the crisis is clearly not appropriate. OJK is a supervisor and it does not have the ability to create money or the ability on the fiscal side. The incentive that the OJK can issue is looseness in regulations that are non-financial in nature. That, too, is only temporary.
OJK is the supervisor of financial institutions. OJK is not a "bohir" (bouwheer) that has a lot of money to distribute. OJK is the regulatory authority so that the integrity and conduct of the financial sector is as expected. Therefore, the discourse and thoughts on dissolving the OJK must be stopped. Do not be irritated by "some close people" who happen to have access to the President to raise counterproductive issues.
These issues are unproductive, pointless and can destroy the stability and calmness of financial markets. Currently, we need synergy between institutions in overcoming major national economic problems due to the Covid-19 pandemic. The news of the "dissolution" made the relationship between BI and OJK uncomfortable. Likewise between the leadership of the OJK and the President. (race)
Publish on SINDONEWS.COM on July 7, 2020 with the link https://nasional.sindonews.com/read/92276/18/ketika-ojk-diguncang-1594040844