JAKARTA, June 4 — Indonesia's Parliament has passed sweeping legislation that places further emphasis on Bank Indonesia's role in supporting economic growth, while empowering lawmakers to evaluate independent financial regulators and the central bank.
The Dewan Perwakilan Rakyat passed the bill by acclamation, with support from all parties, according to Deputy Speaker Sufmi Dasco Ahmad, who led today's plenary session.
The bill, which has not yet been made public, has added to investor concerns that it could lead to political interference in the central bank, with President Prabowo Subianto determined to stick to his high-growth agenda and achieve eight per cent economic expansion during his term.
At a hearing with Parliament's Finance Commission yesterday, Finance Minister Purbaya Yudhi Sadewa said that existing legislation would be expanded to require the central bank to implement policies that "that create an economic environment conducive to real sector growth and job creation".
Passage of the bill was a formality, with Prabowo's "big-tent" coalition controlling more than 80 per cent of Parliament, where the biggest party outside of his alliance has declared it is not an Opposition party
It comes as investors cool on Indonesia, a G20 economy of US$1.4 trillion (RM5.62 trillion), with Moody's and Fitch earlier this year cutting their credit rating outlooks to negative from stable, citing reduced policymaking credibility and predictability.
The rupiah has lost more than seven per cent against the United States dollar so far this year, making it among the worst-performing emerging Asian currencies. It hit a historic low of 18,045 per dollar on Thursday.
The Jakarta Stock Exchange Composite Index has plunged more than 30 per cent year to date.
Promoting sustainable economic growth is already part of Bank Indonesia's mandate, along with price and foreign exchange rate stability.
