The Indonesian Minister of Finance Jusuf Anwar, has told FinanceAsia.com that he is to fast track the creation of a new 'super regulator' within the next few weeks. Under existing laws, a new regulatory body will have to be created by 2010, but the government plans to complete the task five years early.
"We are reviewing the capital markets law [with a view to] the establishment of a so-called FSA, [like] in London," He says. It will be "where all supervision activities will be put under one roof: capital markets, money markets, insurance, pension funds, finance companies and finance derivative business."
This will see all the regulatory agencies that cover the securities, insurance, pension and fund management industries, merged into the existing capital markets regulator, Bapepam. Bapepam at the moment reports to the Minister of Finance and is represented the government at the deputy minister level. However, once the new super regulator has been created it will be raised to the minister level, be independent from the Ministry of Finance and then report directly to the president.
The move is happening for two main reasons according to Anwar. Firstly as the market evolves so financial institutions in Indonesia, like their global peers, are becoming financial supermarkets, offering products across the range of financial services. Thus the regulatory system that supervises them needs to reflect their structure of operation.
Secondly, the move is happening to plug the gaps in the system to prevent financial crime. "With the development of IT, the world has become seamless and borderless, for good and bad," says Anwar. "There is a free flow of money and capital, which is subject to all the bad things like money laundering and terrorism. So we have to develop our capacity... and to increase our expertise at tracking all these groups. That's why we need to have a very intensive [single] integrated supervisory agency"
It is understood that the present chairman of Bapepam, Herwidayatmo, will be appointed head of the new agency. However, no decision as been taken as to what the agency will be called, although internally in the government it is referred to as the FSA.
Separately, Anwar confirmed that the government is looking to complete its third international bond deal by the end of the first quarter, although no decisions have yet been taken as to when road shows will begin. It has been decided that there will be two road show teams, one going to the US and one to Asia and Europe. It has also been decided that the government will only look to raise dollars, not euros. "I'm looking for dollars only," confirms Anwar. "Euro for me is little bit risky. Most of our export earnings are in US dollars and so we will keep to the traditional [dollar market]."
Anwar said that the next time the Republic goes to the market it could look at raising other currencies. It is also considering other types of bonds, such as Islamic sukuks. "But not today," he says.