Constitutional law expert Zainal Arifin Mochtar testifying remotely as an expert for the President at a judicial review hearing of Law on Financial Sector Development and Reinforcement, Monday (12/16/2024). Photo by MKRI/Panji.
JAKARTA (MKRI) — Constitutional law expert Zainal Arifin Mochtar testified as an expert for the President at the material judicial review hearing of Article 7 points 6 and 57 and Article 276 point 13 in Law No. 4 of 2023 on the Financial Sector Development and Reinforcement (PPSK Law). He said the word “approval” in those articles relates more to “control,” not to the transfer of authority.
“The state’s control due to budget is part of the state’s obligation to safeguard citizens so that existing levies or contributions are not used gratuitously, but it does not interfere with the independence in carrying out functions,” Zainal said virtually at the hearing for case No. 85/PUU-XXII/2024 set up to hear the President’s expert’s testimony on Monday, December 16, 2024 in the plenary courtroom.
Furthermore, he said, the concern is how to maintain this control while not interfering with the Deposit Insurance Corporation’s (LPS) independence. Legally, several things must be underlined. First, re-interpretation of things so as not to turn the intention to control into interference with independence.
Zainal said the word “approval” should be reinterpreted to eliminate the impression of a transfer of authority, rather than interpreting it as “joint approval.” In addition, the impression that there is executive intervention in independent state institutions should be to eliminate, and the actual practice that has been done so far should also be reinforced.
The Government has made a statement that there is a memorandum of understanding (MoU) between the Ministry of Finance and the LPS, signed by Sri Mulyani and Purbaya Yudhi Sadewa on October 10, 2024. It confirms that the word “approval” means “joint approval”. So, it is relatively easy if in the future, the phrase “approval” be read as “joint approval.”
Second, boundaries between pure operations, operations that support policies, and operations that purely implement policies must be established. It is better to immediately revise the existing MoU so that only annual work plans and budgets (RKATs) that are purely operational are actually approved. So, those that are operational but in the context of exercising authority and those that purely implement authority are not approved.
Once again Zainal emphasized that because the approval on that matter could potentially damage LPS’ independence, as it leads to government intervention in an independent state institution, it is also important to consider supervision that is more macro-operational than truly technical. This can be outlined in a jointly-arranged MoU.
“And that will explain that the basic issue of this petition is actually not the constitutionality of pure norms, but administrative implementation,” he said.
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The Petitioners—two lecturers and one university student—challenge several articles in Law No. 4 of 2023 on the Financial Sector Development and Reinforcement (PPSK Law). 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.
They argue that there is potential constitutional impairment due to the enforcement of Article 7 points 6 and 57 and Article 276 point 13 of the PPSK, as Article 7 point 57 authorizes LPS to be able to place funds in banks under restructuring based on requests from the OJK (Financial Services Authority), which could potentially overlap with the authority of BI (Bank Indonesia) as the lender of last resort.
Moreover, the authority of LPS in placing funds in banks under restructuring has different requirements that are easier, in this case, those that do not meet BI’s sharia-based short-term liquidity loans. As a result of this vagueness and overlap, there is the potential to burden LPS, in this case reducing its ability and leading to the failure of LPS to carry out its main function, namely guaranteeing customer deposits, which is a form of protection of the Petitioners’ deposits.
In addition, the Petitioners believe government intervention in the form of the Minister of Finance’s approval of LPS annual work plan and budget in these articles raises legitimate doubts on the customers’ side regarding the legal certainty that 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).
In their petitums, the Petitioners request that the Court nullify Article 7 points 57 of Law No. 4 of 2023, which amends the phrase “to obtain approval” in Article 86 paragraph (4) of Law No. 24 of 2004; and the phrase “who has obtained the approval of the Minister of Finance” in Article 86 paragraph (7) letter a of Law No. 24 of 2004. In addition, they request that Article 7 point 6 and Article 276 point 13 be declared unconstitutional and not legally binding.
Author : Mimi Kartika
Editor : Nur R.
PR : Fauzan F.
Translator : 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.
Monday, December 16, 2024 | 13:45 WIB 41