Good Governance Important to Speed Up Economic Recovery: Coordinating Minister

By Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation     Date 4 Maret 2021
Category: News
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Coordinating Minister for Economic Affairs Airlangga Hartarto. Photo by: PR of Cabinet Secretariat.

Coordinating Minister for Economic Affairs has issued Decree Number 44 of 2021 on the National Committee for Governance Policy (KNKG).

The Decree aims to renew the mandate of the National Committee for Governance Policy (KNKG) to strengthen governance in the public and corporate sectors.

“The KNKG term has expired on 31 December 2019, so it is necessary to renew the mandate in the context of the Government’s efforts to deal with COVID-19 and speed up national economic recovery,” Coordinating Minister for Economic Affairs Airlangga Hartarto has said.

The policy is in line with Law Number 11 of 2020 on Job Creation, particularly related to business licensing, whose implementation is regulated through Government Regulation (PP) Number 5 of 2021 on the Implementation of Risk-Based Business Licensing and Government Regulation Number 6 of 2021 on the Implementation of Business Licensing in the Regions.

The KNKG has issued several guidelines for improving governance, including the Good Corporate Governance (GCG) Guidelines, GCG-Based Risk Management Guidelines, and Banking GCG Guidelines. Since 2018, personnel certification program in the field of governance competence has also been implemented for public officials and corporate management.

Based on the ranking on the Worldwide Governance Indicators, Indonesia’s governance ranking in the last five years shows the trend of improvement in indicators of accountability, government effectiveness, regulatory quality, and law enforcement. The application of governance principles needs to be strengthened to increase the achievement of indicators of political stability and security as well as corruption eradication indicator.

The increase in corruption cases involving the public and private sectors in the last five years shows that ethics and governance need to be strengthened. Strengthening the eradication of corruption in particular and governance in general is needed to boost the performance of the national economy.

For the record, the KNKG was established in 1999 under the name of the National Committee for Corporate Governance (KNKCG) based on the Decree of Coordinating Minister for Economic, Financial and Industrial Affairs Number KEP/31/M.EKUIN/08/1999. The establishment of the KNKCG is aimed at preparing Indonesian Good Corporate Governance (GCG) Guidelines for the business sector which are continuously adjusted to developments at the global level.

In 2004, the OECD (Organisation for Economic Co-operation and Development) changed the Principles of Corporate Governance to increase the effectiveness of GCG by adding elements of government and society.

Based on this paradigm shift, in the same year, the Indonesian Government finally adjusted the policy by changing the KNKCG into the National Committee for Governance Policy (KNKG), through the Ministerial Decree Number KEP/49/M.EKON/11/2004.

Based on the reforms, the implementation of GCG and Good Public Governance (GPG) is based on five principles, namely: transparency, accountability, responsibility, independence, and fairness.

To strengthen commitment in implementing good governance, both in the public (government) and corporate sectors, the KNKG establishment was continued through the stipulation of Coordinating Minister Decree Number 117 of 201 that applied until 31 December 2019. (PR of Coordinating Ministry for Economic Affairs/UN) (RI/MMB)

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