Indonesia’s House of Representatives has officially proposed a revision to Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Services Sector (P2SK). This proposed amendment, currently in its harmonized draft stage, has raised significant concerns among economists who fear it could undermine the crucial independence of Bank Indonesia (BI).
“BI’s tasks are becoming increasingly complex, and its independence will undoubtedly be questioned by many parties,” stated Wijayanto Samirin, an economist from Paramadina University, speaking to Katadata.co.id recently. Under the current P2SK Bill draft, BI’s mandate would expand beyond its traditional role of solely formulating monetary policy. While it would retain its core responsibilities of maintaining rupiah exchange rate stability, overseeing the payment system, and supporting sustainable economic growth, its functions would be significantly broadened to actively back the real sector.
A critical addition lies within Article 7 of the revised P2SK Bill, which introduces a second supplementary point. This clause stipulates that BI’s policy mix could also be leveraged to foster a conducive economic environment for real sector growth and job creation. Wijayanto cautions that such an expanded mandate risks introducing bias into BI’s monetary policy direction. He specifically highlights concerns regarding interest rates, liquidity management, and macroeconomic forecasts, adding that “investors will be significantly concerned” by these potential shifts.
M. Rizal Taufikurahman, Head of the Macroeconomics and Finance Center at the Institute for Development of Economics and Finance (Indef), interprets the expanded mandate within the P2SK Bill revision as a fundamental shift for BI. He argues it moves the central bank from ‘strict independence’ to a state of ‘constrained independence.’ Rizal warns that an increase in BI’s objectives inevitably broadens the scope for political intervention. This, he explains, makes interest rate decisions more susceptible to the short-term preferences of the government, thereby “threatening to gradually erode BI’s independence.”
BI Potentially More Tolerant
With this expanded mandate, Rizal contends that BI’s policy direction could become notably more biased. He suggests that a broader remit might compel the central bank to adopt a more accommodating stance, potentially making it “even more tolerant towards inflation in pursuit of real sector targets.” Ultimately, he predicts investors will perceive this as a rise in policy uncertainty, which could exert downward pressure on the rupiah and drive up yields on government bonds. “Monetary credibility itself,” Rizal asserts, “is at stake.”
BI’s Independence Tested
From Andalas University, Syafruddin Karimi offers a nuanced perspective, suggesting that the P2SK Bill does not outright revoke BI’s independence but rather redefines the ‘playing field.’ He states, “BI remains independent; however, its independence is now being tested amidst a more politically charged mandate for economic growth and job creation.” Consequently, the quality of legal protection and political governance will play a crucial role in shaping this new mandate, ultimately determining whether it strengthens or erodes the central bank’s independence.
Summary
Dewan Perwakilan Rakyat mengusulkan revisi Undang-Undang No. 4 Tahun 2023 (UU P2SK), memicu kekhawatiran para ekonom akan kemandirian Bank Indonesia (BI). Draf revisi ini memperluas mandat BI dari kebijakan moneter semata, kini mencakup dukungan aktif untuk pertumbuhan sektor riil dan penciptaan lapangan kerja, terutama melalui Pasal 7. Wijayanto Samirin mengingatkan bahwa perluasan mandat ini berisiko menimbulkan bias dalam kebijakan moneter BI, yang dapat mengkhawatirkan investor.
M. Rizal Taufikurahman menilai perubahan ini menggeser BI dari ‘kemandirian ketat’ menjadi ‘kemandirian terbatas’, membuka celah intervensi politik dan mengikis otonomi BI. Ia memprediksi BI mungkin lebih toleran terhadap inflasi demi target sektor riil, menimbulkan ketidakpastian bagi investor serta menekan rupiah. Syafruddin Karimi menambahkan bahwa kemandirian BI kini diuji oleh mandat yang lebih politis, di mana kualitas perlindungan hukum dan tata kelola politik akan sangat menentukan.
