A recent press release from Indonesia’s Ministry of Finance says that the draft law on the Development and Strengthening of the Financial Sector (RUU P2SK ) has been ratified by the President to become Law (UU) Number 4 of 2023 (UU No.4/2023).
Ratification (UU No.4/2023) was carried out by President Joko Widodo by signing the P2SK Bill on Thursday evening ( 12/01). The government gives its highest appreciation to all members of the People’s Legislative Assembly (DPR), who in this case have initiated the drafting of the draft law and their excellent cooperation in deliberating this bill. Discussion Bills between the Government and the DPR, starting from working meetings, working committees to plenary sessions, always prioritize the interests of the community and are carried out through an open, productive, constructive and dynamic discussion process.
The P2SK Law is an effort by the Government and the DPR to advance public welfare by reforming the Indonesian financial sector. An inclusive, deep and stable financial sector is a key prerequisite for accelerating the development of Indonesia ‘s national economy.
The momentum for Indonesia’s financial sector reform through the P2SK Law is becoming more appropriate in view of the various global challenges that are emerging at this time, such as the pandemic, the geopolitical situation, the potential for recession in various regions, technological developments that are changing the business model of financial services, and climate change. Indonesia’s financial system stability needs to be strengthened to deal with these various global scenarios.
According to the Minister of Finance (Menkeu) Sri Mulyani Indrawati, the Government and the DPR agreed on five scopes of matters regulated in the P2SK Law.
First, institutional strengthening of financial sector authorities while taking into account independence.
Second, strengthening governance and increasing public trust.
Third, encouraging the accumulation of long-term financial sector funds for welfare and sustainable development financing support.
Fourth, consumer protection.
Fifth, literacy, inclusion and innovation in the financial sector.
In the P2SK Law there are 27-chapters and 341-articles contained therein . This law will replace among them 17-laws related to the financial sector, which has been valid for quite a long time, even up to 30-years. This is done to adapt to the dynamics of changing times. Various indicators show the urgency of reforming the Indonesian financial sector, such as the still shallow financial sector, the not yet optimal role of intermediary in the financial sector, and the low level of consumer protection in the financial sector.
After the ratification of the P2SK Law by the President, the Government and regulatory agencies in the financial sector will prepare implementing regulations, namely in the form of Government Regulations, Bank Indonesia Regulations, OJK Regulations, and LPS Regulations. All implementing regulations will be drafted within 2 (two) years after the promulgation of the P2SK Law.
The government will always ensure that the process of drafting various implementing regulations is carried out in a credible manner by involving various related parties including the DPR-RI, supervisory authorities, and the public. For implementing regulations in the form of government regulations, coordination between ministries/ agencies will certainly be carried out in accordance with the applicable mechanism.
Source: Ministry of Finance of The Republic of Indonesia press release