Indonesia’s parliament approved Bank Indonesia Deputy Governor Muliaman Hadad to head the board of a national financial regulator due to start operating in January 2013.
Lawmakers chose Hadad over Achjar Iljas, who held a similar position at the central bank a decade ago, after conducting so-called fit-and-proper tests this month on the 14 people nominated by President Susilo Bambang Yudhoyono for the seven positions at the regulator. Hadad was chosen by acclamation, rather than by vote, according to a notice posted in the meeting room of Commission XI, which oversees financial institutions.
The new regulator, known in the Indonesian language as Otoritas Jasa Keuangan, or OJK, will supervise capital markets, insurers, pension funds and other non-bank institutions next year and oversee commercial lenders starting from January 2014. It will take over regulation of a financial industry dominated by banks that are products of a restructuring in the aftermath of the 1997-98 Asian crisis, and which has prompted Southeast Asia’s largest banking takeover bid.
“Hadad is a competent figure to lead this super-power body as he has experience in supervising banking industries, which control almost 80 percent of financial institutions in Indonesia,” Agustinus Prasetyantoko, a Jakarta-based economist from the University of Atmajaya, said before the announcement.
Hadad earned a bachelor’s degree in economics from the University of Indonesia in 1984 and a master’s in public education from Harvard University in 1991. He received a doctorate in business and economics from Monash University in Melbourne in 1996.
The OJK will take over regulation of capital markets, insurers and pension funds from the Capital Market and Financial Institution Supervisory Board, and assume responsibility for bank supervision, currently handled by the central bank. Bank Indonesia currently oversees 120 foreign and local commercial banks, with total assets of 3,745.1 trillion rupiah ($396 billion) as of April.
Indonesia spent 450 trillion rupiah to rescue lenders during the Asian financial crisis, when anger over corruption during Suharto’s regime helped topple the dictator in 1998. On April 2, Singapore’s DBS Group Holdings Ltd. made a 66 trillion-rupiah takeover offer for PT Bank Danamon Indonesia, a purchase that may be undermined as the central bank considers restricting ownership of the country’s lenders.
Also named to the board: Nelson Tampubolon, a former director in the International Directorate at the central bank, Nurhaida, chairwoman of the Financial Market and Financial Institutions Supervisory Agency at the Ministry of Finance, Rahmat Waluyanto, director general of debt management at the Ministry of Finance, Firdaus Djaelani, commissioner at the Insurance Deposit Agency, Ilya Avianti, auditor at the Supreme Audit Agency and Kusumaningtuti Soetiono, a director in the Directorate of Human Resources at the central bank.