High Hopes for New Law to Handle Crisis
VIVAnews – Three government regulations have been proposed to the House of Representatives (DPR) to be enacted into law. The Government Regulations in Lieu of Law (Perpu) were issued in anticipation of handling financial crises. Their passing into law is seen as being critical for the Department of Finance and the central bank, Bank Indonesia (BI), to make crucial decisions for the economy, especially in light of the current global financial crisis.
According to BI Governor, Boediono, at this time the regulations are very much needed because the financial crisis and its impact are likely to continue and the government does not have a firm basis to make a decision.
Boediono said that without such regulations, it will be difficult to make decisions and market players will view the government as being nervous in facing the crisis. "Nervousness may have a fatal impact," he said at the Financial Department, Tuesday, Dec. 16.
During a global economic crisis such as this, Boediono believes that uncertainty will continue, and there will be a point where the government must make a decision. He cautioned against what happened in the previous financial crisis of 1998. "Don't let it be like 10 years ago. We made a decision and then we were sued," he said.
The three governmental regulations that have been proposed are Perpu No.2/2008 on Amendments of Law on Bank Indonesia (BI). In the article 11 of the Perpu, BI may provide short-term financing as facility. Perpu No.3/2008 amends Law No.24/2004 on Indonesia Deposit Insurance Corporation (LPS) and Perpu No.4/2008 which deals with Financial Safety Nets (JPSK). These regulations were issued in anticipation of moves that will be taken in handling the financial crisis.
The government and the central bank, Bank Indonesia (BI) had signed a Memorandum of Understanding (MoU) in 2004 stating that the two institutions will make joint-decisions in handling financial crises.
The Department of Finance also shares the same sentiment. Finance Minister Sri Mulyani Indrawati has high hopes for the passing of the three regulations into law.
Mulyani said that nobody can predict how the economy would look in the recent future. Therefore the three regulations were proposed as safety precautions.
If the passing of these regulations into law were to be rejected by the House, they will become ineffective. But, Mulyani added, if the regulations were rejected by the House, then the Draft Bill on retracting Perpu will be brought forward because the regulations would have to be formally retracted.
“[The House] have a policy for discussing the passing of Perpu into Law. If it was to be rejected, the Perpu does not automatically disappear because the president would issue a new law retracting the regulation, including handling all the consequences,” explained Mulyani at the Department of Finance, Tuesday, Dec. 16.
“We only expect the House of Representatives will weigh the positive and negative sides. We hope for the best for the Republic and we cannot count on an uncertain future,” she said.
VIVAnews journalists Umi Kalsum, Nur Farida Ahniar, Antiqu and Agus Dwi Darmawan contributed to this article.
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