P2SK Law Revision: DPR Evaluation Role and Bank Independence

On 2 October 2025, the House of Representatives’ Commission XI submitted a draft amendment to Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (P2SK). The proposal gives parliament an evaluative role over Bank Indonesia, the Financial Services Authority (OJK) and the Deposit Insurance Agency (LPS), while appointment and dismissal powers remain with the President.

The 2023 P2SK law originally created a coordinated framework for BI, OJK, LPS and the Ministry of Finance to safeguard financial‑system stability. An earlier draft had even allowed the DPR to recommend the dismissal of senior officials, but that clause was removed after criticism from academics, investors and international bodies. The current version limits the DPR to annual evaluations, hearings and policy input without direct authority to appoint or fire officials.

The change aims to improve transparency while preserving the central bank’s independence, yet analysts warn that a broad evaluative scope could be used for political pressure. If parliamentary reviews turn into de‑facto control, market confidence in interest‑rate and exchange‑rate policy may weaken, potentially increasing rupiah volatility. The government stresses that the amendment is intended to strengthen checks and balances, not to undermine the autonomy of the central bank.