TEMPO.CO, Jakarta - The plan to dissolve the Financial Service Authority (OJK) will only reduce the confidence investors have in Indonesia, said Aviliani, senior economist from the Institute for Development of Economics and Finance (Indef).

"This is dangerous for the confidence of investors since it gives the impression that we have no long-term confidence in the state institution," he said on Wednesday.

If OJK has not worked optimally to supervise financial institutions, both banks and non-bank financial institutions, then its supervision system must be strengthened and improved, she said.

"If a problem arises, we must think of how to improve the system based on inputs from the public. For instance, if most of the problems are found from non-bank (financial institutions), then the OJK's supervision system must be improved," she added.

"In my view, OJK has started to think of how to tighten non-bank financial institutions as it has done to the banking sector," she said.

Looking ahead, OJK needs to make better and clearer systems and regulations, including a regulation on whether or not an insurance company is allowed to manage investments, she said.

"This means that there are double the number of institutions allowed to issue products. So we must think of allowing insurance companies to focus on insurance businesses, including health and life insurance," she said.

Indef Executive Director, Eko Listiyanto, shared Aviliani's views, saying the plan to dissolve the OJK is not right. "It is not very relevant. What OJK needs to do is improve its supervision system," he said.

ANTARA