JAKARTA, July 28 — Southeast Asia's biggest economy will get a new central bank chief after Bank Indonesia (BI) Governor Perry Warjiyo's sudden resignation was announced this week.
Here are the details of the process to nominate a new governor, which will be under close scrutiny amid investor concerns about government interference in the bank's independence:
A sitting president — in this case, Prabowo Subianto — can nominate three candidates for the post. The nominees can be internal BI employees or external, but they must be Indonesian citizens, possess "high integrity and moral character", and have "expertise and experience" in economics, finance, banking, or law.
To be eligible, a candidate must not be a member of any political party at the time of nomination.
Since 2010, presidents have put forward only one name as a candidate for BI governor, as was the case with Warjiyo in 2018, nominated by Prabowo's predecessor Joko Widodo.
Once selected, the name or names are then forwarded to Parliament, which sets up what is called a "fit and proper" test before a Parliamentary commission that oversees financial affairs.
The commission currently has 45 members, all parliamentarians representing every political party present in the House.
As part of the test, candidates are asked questions about the policies they plan to implement, and they are also given an opportunity to lay out their vision for the bank.
Parliament can reject candidates even if they have been proposed by the President. If it does so, the President will then submit new names for consideration.
The commission rejected two nominees in 2008 before approving a candidate proposed in the second round.
Prabowo's big tent coalition controls 81 per cent of seats in Parliament, and even outside that majority there has been little opposition to the government's policies. Hence, it is considered unlikely that the President's chosen candidate will be rejected.
The approved nominee is then sworn in by the Supreme Court for a five-year term, which can be extended just once to take the maximum total term to 10 years.
Under normal circumstances, the law requires the President to submit names no later than three months before the governor's term ends, but it is unclear whether the timeline applies when a governor resigns. Meanwhile, Parliament must make a decision within a month of the president submitting names.
Since 1999, the only BI governor before Warjiyo to resign before his term formally ended was Boediono, who stepped down to run as a candidate for vice-president under Susilo Bambang Yudhoyono. BI was then run by two interim chiefs for over a year before the second one was appointed on a permanent basis.
BI is currently being run by interim chief Destry Damayanti, who was Warjiyo's senior deputy governor.
BI became formally independent from the government in 1999 just after the Asian financial crisis devastated Indonesia's economy and led to crippling inflation and political unrest.
