Financial Services Authority (OJK) & Banking Regulations ... · Business Assessor in conducting a Professional Assessment Assignment in the form of a Business Feasibility Study is

Financial Services Authority (OJK) & Banking Regulations

Update

The following is a list of the new Financial Services Authority (OJK) & banking regulations.

All regulations are available in Indonesian.

Financial Services Authority (OJK) & Banking Regulations Update

KM No.9/September/2020 15 September 2020

New Financial Services Authority (OJK) Regulations

1. Regulation : 44/POJK.05/2020

Date : 2 September 2020

Title (Indonesian) : Penerapan manajemen risiko bagi lembaga jasa keuangan nonbank

Title (English) : Implementation of risk management for non-bank financial services institutions

Summary

Considering that Financial Services Authority Regulation number 1/POJK.05/2015 does not accommodate the development

of the legal need to improve the quality of risk management implementation for non-bank financial services institutions

(LJKNB), this regulation needs to be replaced. This regulation regulates the following provisions.

The objects regulated in this regulation are:

o Insurance companies, which consist of insurance companies, sharia insurance companies, reinsurance

companies, sharia reinsurance companies, insurance brokers, reinsurance brokers, and insurance loss

assessor companies;

o Pension funds and sharia pension funds; and

o Financing companies and sharia financing companies

LJKNB is obliged to implement effective risk management, which includes:

o Active supervision of the board of directors, board of commissioners and sharia supervisory board;

o Adequacy of risk management policies and procedures and determination of risk limits;

o Adequacy of identification process, measurement, control and risk monitoring, as well as risk management

information system; and

o Comprehensive internal control system.

The implementation of risk management in LJKNB must be adjusted to the objectives, business policies, size and

complexity of LJKNB's business.

Provisons regarding active supervision of the board of directors, board of commissioners, and sharia supervisory

board.

Provisions regarding the adequacy of risk management policies and procedures and determination of risk limits.

Provisions regarding the adequacy of the identification process, measurement, control and risk monitoring, as well

as the risk management information system,

Provisions regarding the comprehensive internal control system.

It is the LJKNB’s obligation to establish:

o Risk management committee; and

o Risk management function.

The risk management function must be independent towards the business and operational functions (risk taking

unit) and internal control functions.

It is mandatory for LJKNB to have policies and procedures that are written to manage the inherent risk in the

development or expansion of LJKNB’s business activities.

Special provisions include:

o In the event that LJKNB implement integrated risk management, the risk management function can be

incorporated into the structure of the related LJKNB financial conglomeration.

o Implementation of risk management for financial institution pension funds can be combined with the

implementation of risk management.

https://www.ojk.go.id/id/regulasi/Documents/Pages/Penerapan-Manajemen-Risiko-bagi-Lembaga-Jasa-Keuangan-Nonbank/pojk%2044-2020.pdf

The compliance enforcement towards Financial Services Authority Regulation regarding Risk Management can be

in the form of:

o Sanction in the form of written warning;

o Decreased soundness result; and/or

o Reassessment of the LJKNB main party.

2. Regulation : 18/SEOJK.05/2020

Date : 27 August 2020

Title (Indonesian) : Rencana bisnis perusahaan pembiayaan infrastruktur

Title (English) : Infrastructure financing company business plan

Summary

With the issuance of Financial Services Authority Regulation number 24/POJK.05/2019, it is necessary to regulate the scope

of the business plan, the form and structure of the business plan realization report, the form and structure of the business

plan supervision report, and the procedures for submitting business plans, adjusting business plans, changing business plans,

business plan realization report, and infrastructure financing company business plan supervision report. This regulation

regulates the following provisions.

The scope of the Business Plan, including for Infrastructure Financing Company that carries out part of their business

activities based on Sharia Principles (having a Sharia Business Unit), which at least contains:

o Executive summary;

o Evaluation of the implementation of the previous period's business plan;

o Vision, mission and business strategy;

o Management policies and policies and plans

o Financial report projection and assumptions used; certain ratios and items; and

o Other information.

Form and structure of the Business Plan Realization Report which includes an explanation of the achievement of

the Business Plan, follow-up to the achievement of the Business Plan, financial ratios and certain items and other

information.

Form and structure of the Business Plan Supervision Report, which includes the realization of the Business Plan,

both quantitatively and qualitatively; factors that affect the performance of the Infrastructure Financing Company;

and efforts to improve the performance of Infrastructure Financing Companies.

Procedures for submitting Business Plans, adjusting Business Plans, changing Business Plans, Business Plan

Realization Report, and Business Plan Supervisory Report must be done online through the Financial Services

Authority's data communication network system.

3. Regulation : 17/SEOJK.04/2020


Title (Indonesian) : Pedoman penilaian dan penyajian laporan penilaian bisnis di pasar modal

Title (English) : Guidelines for assessment and presentation of business valuation report in the capital

market

Summary

https://www.ojk.go.id/id/regulasi/Documents/Pages/Rencana-Bisnis-Perusahaan-Pembiayaan-Infrastruktur/seojk%2018-2020.pdfhttps://www.ojk.go.id/id/regulasi/Documents/Pages/Pedoman-Penilaian-dan-Penyajian-Laporan-Penilaian-Bisnis-di-Pasar-Modal/seojk%2017-2020.pdf

With the issuance of Financial Services Authority Regulation number 35/POJK.04/2020, it is necessary to regulate provisions

regarding assessment guidelines and presentation of business assessment report in the Capital Market. This regulation

regulates the following provisions.

To carry out the Assessment of a business on the premise of Business Continuity where there is projection for a

fixed period of time and a period of eternal time, the Business Assessor needs to calculate the Terminal Value.

Terminal Value estimation is carried out in applying the discounted cash flow method with 2 (two) financial

statement projection periods, namely the fixed time period and the eternal time period using the method contained

in this regulation.

In the event that the Business Assessor carries out a Professional Assessment Assignment in the form of a Fairness

Opinion, the Business Assessor must comply with several provisions such as the Fairness Opinion must be provided

for the entire transaction plan and elements of the transaction plan analysis and the minimum analysis that must

be carried out before giving a Fairness Opinion.

Fairness Opinion on Lending and Borrowing Funds and/or Guarantee Transactions including guaranteeing assets

and/or providing guarantee that the company must comply with several provisions such as, the fairness opinion

must be based on the results of an evaluation of the transaction object and is given on the entire plan of lending

and borrowing funds and/or guarantee as well as elements of the transaction plan analysis.

In the event that a Business Assessor carries out a Professional Assessment Assignment in the form of a Business

Feasibility Study, the Business Assessor is obliged to fulfill several conditions such as the opinion given by the

Business Assessor in conducting a Professional Assessment Assignment in the form of a Business Feasibility Study is

to declare the feasibility of a business or project. In addition, in the event that a Business Assessor does not have

expertise in the field of property, a Business Feasibility Study which requires a Property Assessment must refer to

the results of the Property Assessor's opinion.

Business Valuation Report which regulates the form and content that must be disclosed in the Business Valuation

Report.

New Banking Regulation

1. Regulation : 22/12/PBI/2020


Title (Indonesian) : Penyelesaian Transaksi Bilateral menggunakan mata uang lokal (local currency settlement) melalui bank

Title (English) : Bilateral Transaction Settlement Using Local Currency (Local Currency Settlement) Through Banks

Summary

In order to anticipate cooperation between Bank Indonesia and other partner country authorities, it is necessary to improve

the provisions governing the settlement of bilateral transactions using the local currency (Local Currency Settlement/LCS).

This regulation regulates the following provisions.

Bank Indonesia together with partner country authorities compiled the criteria for an ACCD Bank (Appointed Cross

Currency Dealer) and then appointed a Bank as an ACCD Bank by considering the prepared criteria. In addition, BI

together with partner country authorities can terminate the appointment of a bank as an ACCD Bank.

ACCD Bank Activities and Financial Transactions for the purpose of implementing LCS (Local Currency Settlement).

Bank ACCD Indonesia performs:

https://www.bi.go.id/id/peraturan/moneter/Documents/PBI_221220.pdf

o Financial activities which include: opening of SNA (Special Purpose Non-Resident Account) Rupiah, SNA

Mitra and Sub-SNA Mitra; management of Special Purpose Non-Resident Account balance and Sub-Special

Purpose Non-Resident Account balance; transfer of funds; and Financing.

o Financial transactions, including tod, tom and spot transactions, as well as other transactions agreed by

Bank Indonesia with the authorities of partner countries.

Provisions regarding the underlying Transaction which include:

o General Principles of Underlying Transactions

o Types of Underlying Transactions

o Underlying Transaction Documents

Bank ACCD Indonesia is required to issue price quotations for partner countries' currencies against rupiah, which

reflects fair prices on the foreign exchange market and can be transacted (hittable)

Bank ACCD Indonesia can have an open position for partner country currency transactions at the end of each Day

for the purpose of implementing LCS and is prohibited from exceeding a certain amount at the end of each day.

Bank ACCD Indonesia is required to prepare and submit reports and/or report corrections for the purpose of

implementing LCS to Bank Indonesia in a correct, complete and timely manner.

Bank Indonesia supervises the activities and financial transactions of Bank ACCD Indonesia for the purposes of

implementing LCS, including:

o Indirect monitoring (off site); and/or

o Inspection (on site).

2. Regulation : 22/20/PADG/2020


Title (Indonesian) : Penyelesaian Transaksi Bilateral Antara Indonesia dan Jepang menggunakan Rupiah dan Yen melalui

bank

Title (English) : Settlement of Bilateral Transactions between Indonesia and Japan using Rupiah and Yen through

banks

Summary

With the issuance of a Bank Indonesia Regulation concerning settlement of bilateral transactions using local currencies

through banks (local currency settlement/LCS), it is necessary to stipulate implementing regulations regarding the settlement

of bilateral transactions between Indonesia and Japan using Rupiah and Yen through banks. This regulation regulates the

following provisions.

The appointment criteria and the mechanism for the appointment of a Bank ACCD (Bank Appointed Cross Currency

Dealer) Indonesia.

Financial activities for the purpose of implementing LCS in the form of Opening a SNA (Special Purpose Non-Resident

Account) Rupiah, SNA Yen and Sub-SNA Yen; Management of SNA Yen, Sub-SNA Yen and Sub-SNA Rupiah balance;

Transfer of funds; and Financing.

Financial transactions in the form of rupiah transactions against yen.

Bank ACCD Indonesia is prohibited from conducting NDF (non-deliverable forward) transactions as stipulated by BI

regarding DNDF (domestic non-deliverable forward).

Underlying transactions, which include types of undelying transactions, underlying transaction documents ,

underlying transaction documents for rupiah transactions against yen and documents for underlying transactions

for financing.

Bank ACCD Indonesia is required to issue price quotations for yen against rupiah on information facilities at least 1

(once) per day with quoted prices that reflect fair prices and can be transacted in carrying out spot and forward

transactions.

Evaluation and Termination of Appointment of Bank ACCD Indonesia.

https://www.bi.go.id/id/peraturan/moneter/Documents/PADG_222020.pdf

Bank ACCD Indonesia is required to prepare and submit periodic reports and incidental reports related to the

implementation of the Rupiah and Yen LCS to Bank Indonesia.

Correspondence.

Procedure for Imposing Sanctions.

3. Regulation : 118/PMK.06/2020


Title (Indonesian) : Investasi Pemerintah dalam rangka program Pemulihan Ekonomi Nasional

Title (English) : Government investment for the National Economic Recovery program

Summary

Government investment for the National Economic Recovery Program (PEN) is the placement of a number of funds and/or

financial assets sourced from the State Budget (APBN) in the long term for investment in the form of shares, debt securities,

and/or direct investment in order to obtain economic, social, and/or other benefits. The placement of these funds will be

given through State-Owned Enterprises (BUMN) or the Indonesian Export Financing Agency (LPEI) to business actors in the

real sector and the financial sector which includes micro, small, medium, large businesses and cooperatives whose business

activities affected by the Covid-19 pandemic. Placement of these funds is intended so that Government Investment in the

PEN Program is able to protect, maintain, and increase the economic capacity of BUMN or Institutions to be carried out with

good governance and provide optimal results.

https://jdih.kemenkeu.go.id/api/AppMediaCatalogs/Download/9fea6885-854f-4f6d-ad5d-4e4722b0dfea

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