Bank Indonesia as State Institution

1. BANK INDONESIA’S POSITION AS A STATE INSTITUTION Wahono Diphayana

2. 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.

3. 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.

4. 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.

5. 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.

6. 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

7. 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.

8. BI’s Relationship with the Government: Independence within Interdependence Despite independent coordination essential, as Bank Indonesia’s responsibilities are an inseparable part of holistic national economic policies. Bank Indonesia’s state with the status as an institution, Government consultative remains

9. BI’s Relationship with the Government: Independence within Interdependence 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.

10. BI’s Relationship with the Government: Independence within Interdependence 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.

11. 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.

12. Collaboration with other Institutions 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.

13. Collaboration with other Institutions 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

14. BANK INDONESIA & PUBLIC

15. 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.

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

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

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

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

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

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

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

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