The Petitioners’ legal counsel conveying the petition’s subject matters at the preliminary hearing of the material judicial review of Law No. 4 of 2023 on PPSK, Thursday (8/1/2024). Photo by MKRI/Ifa.
JAKARTA (MKRI) — Two lecturers and one university student have filed a material judicial review petition of Article 7 points 6 and 57; Article 86 paragraphs (4), (6), and (7) letter a; and Article 276 points 3, 13, and 24 in Law No. 4 of 2023 on the Financial Sector Development and Reinforcement (PPSK Law).
The Petitioners of case No. 85/PUU-XXII/2024 argued that there is potential constitutional impairment due to the enforcement of the articles since they undermine the independence of the Deposit Insurance Corporation (LPS) in carrying out its duties and function as an independent regulatory agency.
“Political intervention against LPS, an independent institution that has constitutional importance, is clearly contrary to the spirit of Article 23D of the 1945 Constitution, which guarantees the independence of the central bank in particular and the governance of the monetary, financial, and banking systems in general and can contribute to the loss of recognition, guarantees, protection, and legal certainty guaranteed by Article 28D paragraph (1) of the 1945 Constitution,” said the Petitioners’ legal counsel Miko Susanto Ginting before Constitutional Justices Enny Nurbaningsih (panel chair), M. Guntur Hamzah, and Anwar Usman at the preliminary hearing on Thursday, August 1, 2024.
Giri Ahmad Taufik (Petitioner I) is a constitutional law lecturer at Djuanda University in Bogor while Wicaksana Dramanda (Petitioner II) is a constitutional law lecturer at the Islam University of Bandung. Mario Angkawidjaja (Petitioner III) is a university student and customer of microcredit bank (BPR) Nusantara Bona Pasogit (NBP) 31 Jatinangor.
As a microcredit bank customer, Petitioner III is highly subject to acts taken by the LPS. There is an empirical fact that BPRs are among the most frequently liquidated banks by LPS. Within January 1 to April 29, 2024, the LPS has liquidated 10 BPRs with a total claim of 37 billion rupiahs to 42,248 customers.
Article 7 points 6 of Law No. 4 of 2023 amends Article 6 paragraph (1) letter l; Article 276 point 3 inserts Article 16 paragraph (3) of Law No. 9 of 2016; Article 276 point 13 inserts Articles 20B, 20C, and 20D of Law No. 9 of 2016; while Article 276 point 24 amends Article 30 letter b of Law No. 9 of 2016. All these articles authorize the LPS to be able to place funds in banks under restructuring based on requests from the Financial Services Authority (OJK), which could potentially overlap with the authority of Bank Indonesia (BI) as the lender of last resort.
Moreover, the LPS’s authority of placing funds in banks under restructuring has different, more lax requirements—in this case, those that do not meet the short-term liquidity loans based on sharia principles owned by BI. As a result of this lack of clarity and overlap, it could potentially burden the LPS, in this case reducing the LPS’s ability and leading to the failure of the LPS to carry out its main function of guaranteeing customer deposits, which is a form of protection for the Petitioners’ deposits.
Government intervention in the form of the Minister of Finance’s approval of the LPS annual work plan and budget in these articles raises legitimate doubts on the customers’ side regarding the legal certainty that the LPS will exercise its authority professionally and based on expertise alone, without political interference. Although independence has accountability limits, the Minister of Finance’s approval authority in these provisions lacks the basis of necessity and balancing. In terms of necessity and balance, the highly interventionist provisions on work and financial planning for LPS operational activities do not have a strong reason, considering the institutional design of LPS, which is led collectively collegially by all members of the board of commissioners, where all LPS decisions must be made through a process of deliberation for consensus (vide Article 7 point 46 of Law No. 4 of 2023, which amends Article 72 paragraph (1) of Law No. 24 of 2004).
The Petitioners’ interest and constitutional rights, both as citizens and bank customers, could potentially be harmed. They might not have guarantee of an independent banking system and an appropriate division of affairs for the central bank and other constitutional monetary institutions as contained in Article 23D of the 1945 Constitution. Their right to advance themselves in fighting for their rights collectively to develop their community, nation, and country as per Article 28C paragraph (2) of the 1945 Constitution as well as their right to recognition, guarantee, protection, and certainty of a just law and equal treatment before the law as stipulated in Article 28D paragraph (1) of the 1945 Constitution might also be violated.
In their petitum, the Petitioners request that the Court declare the phrase “which has obtained the approval of the Minister of Finance as referred to in paragraph (6)” in Article 7 points 6 and 57; Article 86 paragraphs (4), (6), and (7) letter a; and Article 276 points 3, 13, and 24 in Law No. 4 of 2023 unconstitutional and not legally binding.
Justices’ Advice
Justice Enny said the Petitioners’ petitum has not followed the Court’s standard. In addition, she expected them to explain their legal standing in more detail and connect it to their constitutional rights that have been harmed by the enforcement of the articles. The Petitioners must convince the Court of the constitutional impairment in question.
“So, the legal standing is very important. The constitutional impairment must be obvious, and whether there is causality (between the impairment and the norms). Without this causality, [the petition] cannot [continue]. There must be constitutional impairment, be it potential or actual. This must be explained too,” she explained.
Before adjourning the hearing, Justice Enny announced that the Petitioner must submit a revised petition by Wednesday, August 14, 2024 at 14:00 WIB to the Registrar’s Office.
Authors : Mimi Kartika
Editor : Nur R.
PR : Fauzan Febriyan
Translators : Yuniar Widiastuti (NL)
Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.
Thursday, August 01, 2024 | 16:30 WIB 65