- VivaNews/ Nur Farida
VIVAnews - Indonesia opposes the plan regarding financial levy on major banks in Indonesia. Bank Indonesia (BI) has affirmed the objection and announced it during the G20 meeting in Toronto.
Bank Indonesia Deputy Governor Halim Alamsyah said the agreement on the financial levy will not possibly be applied in Indonesia because it would be a burden on the banks.
“The discussion was pretty intense and later we agreed not to agree,” Alamsyah said at a press conference at the office of Finance Ministry on June 30.
The agreement aimed to allow G20 countries to permit differing countries not to enforce financial levy.
“We’ll still be discussing about it in the future because if it’s applied widely, it will hamper the expansion activity of financial institutions in providing credit while the world isn’t stable yet (still recovering from the global crisis,” he said.
Forcing the levy will also induce fear of slowing global expansion. According to Alamsyah, the G20 countries have agreed to hand the financial reform over to each country.
“For us in Indonesia, it’s because our banks are strong enough and during the initial simulation, it was established that our banks aren’t like what they define, conducting advanced transactions”. Certainly, in the implementation of financial levy, such thing is unnecessary.
Financial levy is the result of every country’s desire to reduce moral hazard against major internationally-operating, otherwise known as Systematically Important Financial Institutions (SIFI).
SIFI are aware that if the 2008 crisis re-occurs, high amount of funding, which cannot be taken out of the State Budget because it will encumber taxpayers, is required.
“SIFI are major banks and we still can’t be considered as one of them”.
Due to the inability to seek funds from taxpayers in times of crisis, the idea of applying financial levy was uttered. “So, the results of the levy will be saved and if there’s any failure, the fund can be used to cover it”.
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Translated by: Nataya Ermanti
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