A More Balanced View of the OJK
A frontispiece bearing the logo of coworking space GoWork marks Unit 102 AB on the ground floor of the Setiabudi 2 building on Jl. HR Rasuna Said in Kuningan, Jakarta. PT Masyarakat Sejahtera Maju has been found to be fraudulently using the address as the location of its business.
An article by Irvan Rahardjo titled “The OJK Paradox” published in Kompas (23 Aug. 2019) contains several intriguing points. It is necessary to respond to this article so as to provide the public with more comprehensive, balanced information and to avoid any misperception of the Financial Services Authority (OJK).
Although the title refers to the OJK, the article targets several institutions, and the government, the House of Representatives (DPR) and the OJK Board of Commissioners selection committee are not spared criticism.
In dealing with the law pertaining to the policy underwriting program thus absent so far, the article alludes to the government and the DPR. When questioning (still) the existence of the OJK as regards the International Monetary Fund’s recommendation, it is surely taking aim at the maker of Law No. 21/2011 on the OJK. Likewise, when it refers to the government regulation on joint entities in the insurance industry and the OJK levies, it is targeting the government.
Insurance as a common issue
With these criticisms directed at other institutions, the article should have concluded that the problem in the insurance industry cannot be resolved by the OJK alone. Sadly, this conclusion is not clearly reflected in the analysis.
On the positive side, the article encourages improvements in OJK governance. The quality of governance is indeed key to an institution‘s success. As a public institution, the OJK must be supervised, even criticized, so that it can raise its performance to meet stakeholders’ expectations.
Irvan Rahardjo’s article contains at least has four points that require elaboration. The public needs to have more adequate information in order to be aware of the true reality.
First, when the Supreme Audit Agency (BPK), the Indonesia Ombudsman and the DPR criticize the OJK’s performance, it should be understood that these institutions are executing their functions. There is nothing odd in this. They are authorized to evaluate the OJK within the scope of their duties and authorities.
The BPK is authorized to give its opinion on the OJK’s financial report. The Ombudsman, on various occasions, requests explanations from the OJK about the services it renders to the public. Meanwhile, the DPR executes its supervision through Commission XI as per usual.
The OJK actually requires supervision by these three institutions. It is natural for the three to offer their feedback/criticisms. None should arouse suspicion.
Second, comparing the OJK’s levies and its independence is irrelevant. The reality is that the quality of the OJK’s consumer supervision and protection is unaffected, even though the OJK’s budget comes from the levies it charges the financial services industry (IJK), subject to control. It would be naïve to accuse the OJK of an inability to protect its consumers because its budget comes from industry levies.
The OJK’s independence must not be incapacitated due to the levies.
As stipulated in Law No. 21/2011 on the OJK, the OJK budget has two sources: the State Budget on Incomes and Expenditures and/or levy collections from parties engaged in financial services. The OJK’s independence must not be incapacitated due to the levies.
Third, the OJK maintains performance standards through key performance indicators. The DPR annually approves the OJK’s strategic program and budget, and it appraises the OJK’s performance based on these.
Pursuant to Article 38 of Law No. 21/2011, the OJK is obligated to submit quarterly reports to the DPR. The DPR has a regularly scheduled evaluation of the OJK’s responsibility to the public.
Fourth, the issue of Asuransi Jiwa Bersama Bumiputera 1912 (AJBB) needs more level assessment. The problems plaguing AJBB emerged long before the OJK was founded. The government regulation on joint business entities, which could be one of the instruments used to settle the AJBB’s predicament, is beyond the OJK’s purview.
The AJBB issue that was triggered by mismanagement, among others, certainly cannot be placed squarely on the OJK’s shoulders. There is joint responsibility because the OJK has limited authority in some areas. Of course, it should not be overlooked that AJBB executives and its former managers has a share of the (moral) responsibility.
Current energy should be devoted to supporting the management in seeking the best solution for AJBB, instead of only seeking to find those to be held responsible. Consumer interest should be prioritized. It is public knowledge that the law on the policy underwriting program, which should have been issued no later than Oct. 17, 2017, still does not exist thus far.
Maintaining OJK governance
The OJK isn’t finished yet with its duty to educate the public. Many circles still regard the OJK as a super body furnished with everything to control the entire industry. In fact, this is not the case. The OJK needs other institutions for support and cooperation in a variety of forms.
The internal body of the OJK needs not be anxious in the face of criticisms. Every reproach is an expression of the stakeholders’ concerns in ensuring the OJK’s better performance and that it is on the right track.
The mass media and social media have today become an effective means of publicly monitoring the OJK.
The public can fully monitor the OJK’s job in guiding and managing the industry, as well as protecting consumers. The mass media and social media have today become an effective means of publicly monitoring the OJK.
As a public institution, the OJK implements good public governance. Public participation serves as a pillar for the OJK in carrying out its primary function. In making industry regulations, for instance, the OJK actively involves stakeholders like industry associations and other relevant parties.
The public is not only involved in making rules and voicing its aspirations through formal and informal channels. There public is also involved in controlling the behavior of the OJK leadership and employees.
The whistle blowing system (WBS) has been stringently utilized to help maintain the OJK’s governance. The WBS guarantees the confidentiality of informers to ensure its effectiveness.
The OJK continuously improves through internal restructuring. In addition, it should be acknowledged gratefully that the BPK has given its unqualified opinion on the OJK’s financial reports.
To maintain the OJK on the right track in terms of integrity, the Corruption Eradication Commission (KPK) provides assistance in preventing fraud. Strengthening its integrity is a major asset for the OJK in gaining public trust. Its 100 percent rating to date in reporting the wealth of public officials (electronic wealth reporting, LHKPN) and controlling gratification have earned the KPK’s appreciation.
The OJK is a state agency. The public can be actively involved in controlling it by providing feedback directly, as well as through other institutions like the DPR, the Ombudsman or the BPK. The public can contribute to regulating and supervising the financial services industry and the OJK’s consumer protection efforts.
It is impossible for the OJK alone to fulfill the large scope of responsibility required to develop a sound industry with continued growth and contributions. The OJK’s synergy with stakeholders, God willing, will make a significant contribution to the country’s population. Let us hope.
Munawar, Deputy Director of the Financial Services Authority
