Indef Pushes for Regulation on Financial Services Conglomerates

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  • TEMPO.CO, Jakarta - Enny Sri Hartati, Executive Director of Institute for Development of Economics and Finance (Indef), said that the domination of financial service conglomerate groups must be regulated immediately. "Moreover, because of the output of the conglomerate is larger than the small medium businesses. This is also related to the democratization of the economy," she said on Sunday, October 5, 2014.

    Enny said that the new government cabinet must be able to position state owned enterprises, conglomerates, micro, small and medium businesses on equal grounds. Therefore, she said, Indef fully supports the Financial Services Authority’s (OJK) plan to regulate financial services conglomerates to promote fair business competition, and eliminate the possibility of special rights and monopoly that has been going on over the years.

    Boedi Armanto, Head of Development, Monitoring and Crisis Management of the OJK, said that the OJK have found many financial conglomerates in Indonesia that are focused on cross sector businesses.

    "There are 31 financial conglomerates in Indonesia consisting of vertical, horizontal and mixed groups," said Boedi on Thursday last week. The conglomerates control nearly 70 percent of the total financial sector assets in Indonesia.

    The presence of the conglomerates, said Boedi, must be monitored closely due to its large numbers and its cross sector potential.

    An integrated monitoring of financial conglomerates that is set to begin in June 2015, is aimed at supervising financial conglomerates that own public banks and categorized as business group IV or banks with a starting capital of over US$2.5 billion.