Besides Industry Contribution, The Financial Services Authority also Needs an “Injection” from the State Budget, For What?

Besides Industry Contribution, The Financial Services Authority also Needs an “Injection” from the State Budget, For What?

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By Eko B. Supriyanto, Chairman of Infobank Media Group

Jakarta – The Financial Services Authority budget is in line with the total assets of the financial services industry. If assets of the financial services industry increase, the Financial Services Authority’s revenue will also increase. However, in the current situation, wise steps are needed, namely reviving the article – where the Financial Services Authority may again be financed by the State Budget.

For example, the construction of buildings throughout Indonesia is financed by the State Budget, or contribution from the government. Don’t delegate everything to an industry that feels heavy at the moment. Also, for the massive financial literacy program, it still feels shallow when compared to Indonesian peer countries.

The Indonesian mentality is a deposit mentality, not yet an investment. He wants to be profitable and doesn’t want to be stumped. In addition, there are still many who are financially illiterate. It can be seen from the rise of fraudulent investments that continue to grow rapidly. Mental greed and incomprehension mixed into one. That is the literacy program that must be massive to houses of Indonesian.

According to Infobank’s records, the Financial Services Authority actually still has room to be financed by the State Budget, but for some reason suddenly after 3 years the Financial Services Authority was established, it was immediately full of industry contributions. Since April 2015 the source of the Financial Services Authority funding is 46% from the State Budget and 54% from industrial levies. Since 2016 until now, the Financial Services Authority’s operations have been borne by the industry. The increase in the Financial Services Authority budget depends on whether or not the financial industry is healthy.

Honestly, with the industry’s full contributions, the Financial Services Authority movement is also limited. This is because the Financial Services Authority’s budget depends on the increase in financial industry assets. So, when the industry is asked to boost credit, some are suspicious, because it will increase assets so that contributions will increase automatically. But the suspicion was unfounded. The Financial Services Authority fee rates range from 0.03%-0.45%. The banking sector contributed the most to the Financial Services Authority’s cash.

Nothing is wrong. But, this step is difficult for the industry and the Financial Services Authority itself. However, since this is an order from law and an agreement between the Financial Services Authority and the House of Representatives of the Republic Indonesia, what are you going to do? Where are the bankers who dare to challenge the authorities, including Bank Indonesia?

If you look at the Financial Services Authority’s financial reports for the last 4 years, namely from 2018-2021, it appears that there are “swollen” posts. Not wrong. Moreover, it has been approved by the House of Representatives of the Republic Indonesia. But it needs to be a lesson for the Financial Services Authority in the future. Have a take a look, post of buildings and constructions. In 2018 the post for new buildings and constructions was Rp 65.1 billion, and then it fell to Rp 50.1 billion. However, land purchases began to increase from a position of Rp 786 billion to Rp 1.01 trillion. Up 27%.

Land purchases continue. In 2021, the post of Land’s positions reached Rp 1.33 trillion, or almost twice the position in 2018. Even more surprising is the value of buildings and constructions increasing to Rp 339.9 billion. Or, an increase of more than five times from the position in 2018.

Nothing is wrong. Moreover, the Financial Services Authority itself is a new institution that did not have anything at first. The Financial Services Authority is only 10 years old. But there is a question for industry that often sounds “silent”. Is it necessary for the Financial Services Authority to have a magnificent building in the region? The number of the Financial Services Authority offices is 36 offices, consisting of 1 head office, 9 Regional Offices (KR), 26 OJK offices.

That there is a need for the Financial Services Authority offices in the regions, but do they need that many, after all, the financial industry head office is in Jakarta? Furthermore, why does the industry have to bear the cost of buying land and buildings, isn’t that better provided by the State, or simply contributed because government-owned buildings are still there, although not entirely.

So the Financial Services Authority’s budget should be more for literacy programs and increasing the capacity of the Financial Services Authority supervisors. Does not become an expense on fixed assets. Land and buildings should be the duty and obligation of the State, should not be taken for the purchase of land and building construction.

According to the Infobank Institute, the Financial Services Authority’s budget is relatively low considering the number of jobs. Compared to Bank Indonesia, whose supervisory function is handed over to the Financial Services Authority, the budget continues to grow every year. Bank Indonesia’s operating budget reaches Rp 14.29 trillion in 2022.

Meanwhile, the Financial Services Authority in the same period was only Rp 6.32 trillion. If Bank Indonesia does not buy land and build buildings, in the last four years the Financial Services Authority has been diligent in buying land and constructing buildings.

An important lesson in the future, the building has been purchased and must be maintained. But it’s better in the future, the Financial Services Authority is no longer busy building buildings in the regions. If it continues, the construction of the Financial Services Authority head office in the SCBD area can be financed by the State. Article 34 paragraph 2, Law No. 21 of 2011 concerning the Financial Services Authority states, “The Financial Services Authority budget is sourced from the State Budget and/or levies from parties conducting activities in the financial services sector”.

Clear and firm. It is hoped that in the future the Financial Services Authority’s operations will focus more on increasing the capacity of supervisors, and increasing public literacy so that they are financially “literate”. All of this is so that there will be a deepening of the financial sector which has not changed in the last 15 years, the figure in the range of 39-44% (credit compared to GDP).

Meanwhile, the construction of the building is handed over to the State. Thus, the Financial Services Authority’s future steps are more about increasing the number and capacity of supervisors. Not only bank supervisors, but also insurance, finance and capital markets.

Honestly, the number of supervisors compared to the number of industries still needs to be increased. Not to mention talking about conglomeration or integrated supervision, of course it needs the number of supervisors and supervisory capacity. There are no longer silos that have existed genetically since the Financial Services Authority Law was passed in 2011. So, leadership is an important key to reducing those silos.

So, the suggestion that the Financial Services Authority budget is re-injected from the State Budget, not only has a legal basis, but also makes it easier for the Financial Services Authority to increase its capacity. Organizational improvement, and quality improvement, and the number of Financial Services Authority supervisors according to the times. And, the most important thing is that the Financial Services Authority remains independent in supervision. Also, efficient. For example, there is no need for a “circus” group (large group) if official visits to regions or abroad are not so important (ceremonies) to improve the quality of supervisors.

Well, if it’s not 50% of the State Budget and 50% of industry, if the figure of 25%-30% is borne by the State Budget that would be great. Meanwhile, the industry bears 70-75% of the Financial Services Authority budget. Or, the amount of levy receipts is added by 10%-20%. Moreover, there is an article that also states that the excess budget will be deposited into the State treasury. So it’s only natural that the Financial Services Authority can get another financing from the State budget. Mutual cooperation with industry. (*)

 

 

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