bank indonesia's position as a state institution

BANK INDONESIA’S POSITION AS A STATE INSTITUTION

Wahono Diphayana

From a constitutional standpoint, Bank Indonesia’s status as an independent institution is not parallel with higher state institutions such as the House of Representatives, National Audit Office and Supreme Court.

Bank Indonesia’s status is also unlike any State Department as Bank Indonesia’s official position is separate from the Government.

Such special status is required to enable Bank Indonesia to perform its roles and functions as the Monetary Authority more effectively and efficiently.

Despite its status as an independent state institution, Bank Indonesia maintains a close working relationship and tight coordination with the House of Representatives, National Audit Office, Government and other relevant parties.

With respect to its relationship with the

President and House of

Representatives, at the beginning of

each financial year Bank Indonesia

delivers in writing an evaluation of

monetary policy implementation and

future monetary policy planning.

In particular to the House of

Representatives, Bank Indonesia’s

role and responsibilities are reported

quarterly or as requested by the House.

Bank Indonesia also reports its

projected and actual annual budget

to the Government and House of

Representatives. Furthermore, Bank

Indonesia is obliged to disclose its

annual financial report to the National

Audit Office.

BI’s Relationship with the Government: Financial Relationship

Regarding its financial relationship with the Government, Bank Indonesia assists in the issuance and placement of government bonds in order to fund the State Budget. However, Bank Indonesia is prohibited from purchasing government bonds

BI’s Relationship with the Government: Financial Relationship

Bank Indonesia also acts as the Government’s cashier,

administrating the government’s accounts held at Bank

Indonesia. At the Government’s behest, Bank Indonesia is

permitted to receive foreign loans for and on behalf of the

Indonesian Government.

However, Bank Indonesia’s role is centrally focused on

uninterrupted monetary control effectiveness, extending

credit to the Government to overcome deficit spending is

no longer under the auspices of Bank Indonesia.

BI’s Relationship with the Government: Independence within Interdependence

Despite Bank Indonesia’s status as an

independent state institution, consultative

coordination with the Government remains

essential, as Bank Indonesia’s responsibilities are

an inseparable part of holistic national economic

policies.


Coordination between Bank Indonesia and the Government

is facilitated through cabinet sessions to discuss economic,

banking and financial issues related to Bank Indonesia’s

roles and functions. The Government may seek bank

Indonesia’s opinion at the cabinet sessions. In addition,

Bank Indonesia may provide input, opinion as well as

recommendations regarding the Planned State Budget as

well as other policies related to its mandate.


Conversely, the Government may attend Bank

Indonesia’s Board of Governors’ Meeting with the

right to be heard but no right to vote. Therefore,

independence is strongly influenced by a stable

proportional working relationship between Bank

Indonesia, the Government and other related

institutions.

Collaboration with other Institutions

Realizing the importance of support from various parties to

ensure success in carrying out its duties, Bank Indonesia

continuously collaborates and coordinates with many state

institutions and other elements of society. Several

collaborations are set out in a Memorandum of

Understanding (MoU), Joint Decree or some other kind of

formal agreement, which are intended to create synergy

and clarify task distribution among institutions as well as

encourage effective legal enforcement.


Ongoing collaborations include the following:

• Treasury Department: MoU detailing Target Setting, Supervision and Inflation Control Mechanisms in Indonesia; MoU on Bank Indonesia as an agent to process government foreign loans and grants; and a Joint Decree on the administration of government bond issuances in order to improve the soundness of the banking sector.

• Supreme Court & National Police: Joint Decree setting out collaboration to handle criminal activity in the banking sector.


Ongoing collaborations include the following:

• Indonesian National Police and State Intelligence Agency: MoU on the Eradication of counterfeit money.

• Coordinating Ministry for Public Welfare, Ministry of Cooperatives and SMEs: MoU on MSME Empowerment and Development

• Association of SUN Traders (Himdasun): MoU on the formulation of a Master Repurchase Agreement (MRA)

• Joint Decree of Minister of Finance & Governor of Bank Indonesia Concerning Coordination of Government Cash Management

BANK INDONESIA & PUBLIC

WHAT AND WHY: BANK INDONESIA’S CORPORATE SOCIAL RESPONSIBILITY (CSR) PROGRAM?

“…the business community, during the last half of century, has transformed into the most dominant institution on the planet. The dominant institution in any society has to take responsibility for joint interest…every decision made, every action taken has to be seen within the context of such responsibility …”

These were the sentiments expressed by Dr. David C. Korten, the author of the best-selling book “When Corporations Rule the World”. Korten is highlighting how corporate activity influences the quality of life of an individual, society as a whole and even the world. This phenomenon is Corporate Social Responsibility (CSR) in a nutshell.


Similarly, social responsibility seems to be growing almost

daily at Bank Indonesia, which has more than just legal and

monetary economic responsibilities. There are also ethical,

social and discretionary responsibilities, which are not

legally obligatory but performed out of self-desire.


CSR awareness has become a global trend along with the efforts to

prioritize stakeholders. Bank Indonesia’s CSR program is a form of

Good Corporate Governance, as well as supporting the achievement of

the Millennium Goals Development; one of which is to halve poverty by

2015 through MSME-focused CSR, improve public education through

education-focused CSR and preserve the environment through

environment-focused CSR. Bank Indonesia’s CSR program includes

realigning itself with the stakeholders’ requirements and expectations in

relation to issues of ethics, social issues, education, the environment as

well as the economy.


BI-CSR Program Theme

Based on the belief that communication is an essential factor for Bank Indonesia to

maintain its relationship and demonstrate its care in the community, BI CSR aims to

prioritize activities that benefit both parties with the all-embracing goals of:

Improving the public’s economic life, particularly the middle to low-income strata.

• Assisting government programs in building competent human resources able to

compete internationally.

• Improving and maintaining the ecosystem through collaboration with the public.

Therefore, Bank Indonesia CSR Program is reflected by the slogan:

•

• BI COMMUNICATE – eCOsystem, sMall MediUm eNterprIse, and eduCATion for

peoplE


BI Study Visit Program

Study Visits to Bank Indonesia’s Central Office are a part of Bank

Indonesia’s endeavors to educate the public on subjects related to the

Central Bank’s role in the monetary, banking and payment systems.

Bank Indonesia provides an opportunity for the general public to visit

the Central Office every Tuesday and Thursday according to the

procedures set in place.


BI Care Coverage (CSR-BI)

This article provides actual news on BI-CSR activities in the

city as well as in rural areas, including other pertinent

information regarding CSR-BI (CSR-BI News), available in

Bahasa


Code of Conduct

Bank Indonesia Code of Conduct is a standard guideline which reflects the

integrity of Bank Indonesia Employees. Any Bank Indonesia Employee shall

be responsible not only for understanding this Code of Conduct but also for

applying it in daily activities.

• Any Employee is not allowed to abuse position, authority, and/or facility

provided by Bank Indonesia.

• Any Bank Indonesia Official is required to report his/her wealth to Bank

Indonesia and/or the Corruption Eradication Commission (KPK).


Code of Conduct

• Any Employee is not allowed to ask for/receive, give approval to

receive, permit or let family to ask for/receive facility and/or other

matters of monetary value from individual person or institution which is

recognized or reasonably suspected to have relation either directly or

indirectly with the concerned Employee’s position or job.

• Any Employee is required to keep Bank Indonesia secrecy for matters

categorized confidential.

• Any Employee is not allowed to become member, organizer of political

party, and/or to conduct activity for the interest of political party.

Thank You

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