Government Regulation on Financial Policy against COVID-19 criticized

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Coordinating Minister of Politics, Legal, and Security Affairs Mahfud MD. (Photo: Prive. Doc)

Mahfud MD: “This Regulation is meant to protect the people from social and economic collapse”

IO – The Constitution Court has received a request for material testing of Government Regulation In lieu of Law (Peraturan Government Pengganti Undang-undang – “Perppu”) of the Republic of Indonesia Number 1 of 2020 (the “Corona Perppu”). This Regulation concerns the State’s Financial Policy and Fiscal Stability for the Mitigation of the Coronavirus Disease 2019 (COVID-19) Pandemic and/or in order to Face a Threat that Endangers the National Economy and/or the Stability of the Financial System to the Constitution of 1945. In their Petition dated Tuesday 14 April 2020, the Petitioners requested testing of Article 2 Paragraph (1) Letter a Number 1, Number 2, and Number 3 of Article 27, and Article 28 of Perppu Number 1 of 2020. 

This Perppu has generated a lot of criticism, among others from the People’s Representatives in Senayan. Member of the of the Indonesian Democratic Party of Struggle (Partai Demokrasi Indonesia Perjuangan – “PDIP”) of the House of Representatives (Dewan Perwakilan Rakyat – “DPR”), Masinton Pasaribu, stated in his personal Twitter account, @ Masinton (as we have confirmed on Saturday, 18 April 2020), that the Corona Perppu is actually created in the interest of the oligarchy and is a sabotage of the Constitution of 1945. 

However, Coordinating Minister of Politics, Legal, and Security Affairs Mahfud MD states that he does not concern himself with criticisms of this Perppu. “Nobody is prohibited from criticizing any law before DPR, or to request judicial review to the Constitution Court, if they believe that there is a potential for the law to be corrupted. By following such procedures, we will come to a decision that is good for the entire nation,” he said. 

Mahfud MD further stated in his official Twitter account on Monday, 20 April 2020, that Perppu Number 1 of 2020 was issued in order to maintain social and economic stability from collapsing due to the COVID-19 pandemic. 

Similar to the BLBI 

Concerned with possible abuse of the Corona Perppu, Amien Rais, Din Syamsuddin and the Indonesian Anti-Corruption Society (Masyarakat Anti Korupsi Indonesia – “MAKI”) submitted a Charge that Article 2 Paragraph 1 Letter a Numbers 1, 2, and 3 of Article 27, and Article 28 of Perppu Number 1 of 2020, violates the Constitution of 1945. 

Ahmad Yani, one of MAKI’s legal counsels, stated that the Petitioners especially state that the provisions of Article 27 are excessive. They are afraid that a scandal similar to that of the Bank Indonesia Liquidity Assistance (Bantuan Likuiditas Bank Indonesia – “BLBI”) scandal in the 2000’s will repeat itself. The provision of Article 27 Paragraph 2 declares that officials “cannot be charged”. Government officials who perform their duties in relation to this Perppu cannot be charged, whether civilly or criminally, if they perform their duties with goodwill. Any decision they make based on this Perppu cannot be charged to the State Administration courts. Furthermore, it is written that “the costs expended by the Government to save the economy from certain crisis shall not be calculated as State losses”. This is an abuse of power, as it has taken over judicial authority. 

Amien et al. further explained that their Petition was based on the intent to prevent the repeat of the BLBI and Century Bank scandal. At the time, BI’s finances were drained with the excuse that the money was to be used to help our banks recover from the rush crisis. However, bankers twisted the policy and used it to save other companies in their group instead. Furthermore, Article 27 has violated the provisions of Article 23 and Article 23A Constitution of 1945 by preventing the House of Representatives (Dewan Perwakilan Rakyat – “DPR”) from optimally monitoring the use of budgets. 

Another troublesome provision in the Perppu is related to Article 2, which allows the Government to freely determine the limit of the State Budget’s deficit. This might allow deficit levels to be higher than 3% of the GDP with no maximum limit, and this dangerous provision will bind the State Budget Law until the end of the 2022 Fiscal Year. This provision directly restricts DPR’s authority to approve the State Budget, specifically in terms of limiting the level of State Budget Deficit. “Setting the minimum deficit limit without setting its maximum limit is the same as granting a blank check to the Government, to allow it to perform ‘financial acrobatics’ in creating the State Budget for the next three years,” the Petition said. 

The Government earlier stated that legal protection is available for officials who execute the Perppu Number 1 of 2020. Such officials who are involved in the mitigation of the impacts of the Coronavirus are members of the Financial System Stability Committee (Komite Stabilitas Sistem Keuangan – “KSSK”) – including KSSK Secretary, members of the KSSK Secretariat, and the staff and officials of the Ministry of Finance, Bank Indonesia (BI), the Financial Service Authority (Otoritas Jasa Keuangan – “OJK”), and the Deposit Insurance Agency (Lembaga Penjamin Simpanan – “LPS”). “No member of KSSK can be charged, either civilly or criminally, according to the provisions of law. Therefore, it grants legal protection,” said Ministry of Finance Sri Mulyani as Chairwoman of KSSK in a statement on 01 April 2020. “This is because the Government’s expenditures for mitigating Coronavirus are spent as emergency measures, making it not part of the State’s losses.” 

Excessive Reaction 

Member of DPR RI’s Commission III from the Great Indonesia Movement (Gerakan Indonesia Raya – “Gerindra”) Faction Desmond Junaedi Mahesa responds to the trending hashtag #ImpeachmentJokowi in Twitter in relation to the Corona Perppu. According to him, impeaching President Jokowi over the Perppu is excessive and illogical. 

“In order to impeach Indonesia’s Head of State, we must go through the Constitution Court, and the process is not that simple. In fact, even now DPR itself has not approved the Perppu. It has not even been discussed yet. True, some national figures such as Amien Rais and Din Syamsudin have petitioned for judicial review to the Constitution Court. I would look at it as a reminder to the Government that the Perppu should not have existed in the first place. None of us really want the President to be impeached during a State emergency after all,” he said in his press statement on Monday 20 April 2020. 

Desmond stated that recent occurrences relating to the Corona Perppu and any impact that follows are a warning to both the Government and the DPR. “I should think the Government is sensitive and wise enough in its response. I think it is just a warning for DPR, the Government, and the people that they have neglected to formulate certain issues properly,” he said. (Dan)