Regulatory Reform of Financial Conglomerates in Indonesia: A Policy Gap Analysis Against International Best Practices

Abstract

This study examines Indonesia's reformed financial conglomerate regulatory framework—anchored by Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (UU P2SK) and OJK Regulation No. 30 of 2024 (POJK 30/2024)—against international best practices to identify policy gaps and reform priorities. Using qualitative comparative legal analysis and a seven-dimension benchmarking framework, this study evaluates Indonesia's framework against the Joint Forum's 29 Principles for the Supervision of Financial Conglomerates (2012) and the regulatory regimes of Japan, South Korea, Singapore, and Taiwan—four jurisdictions explicitly referenced as benchmarks in Indonesia's own regulatory documents. Indonesia's reform achieves notable advances—particularly the expanded entity scope covering 12+ financial institution types, mandatory Financial Conglomerate Holding Company (PIKK) formation, and dual asset-threshold designation criteria. However, critical gaps persist in: (1) group-wide consolidated capital adequacy methodology; (2) supervisory reach over unregulated group entities; (3) resolution framework for financial conglomerates; and (4) a structural conflict of interest inherent in the novel 'Operational PIKK' concept, which is absent from all four comparator jurisdictions. Financial conglomerates account for approximately 88% of Indonesian banking sector assets, making these gaps systemically significant. This is the first academic study to conduct a comprehensive gap analysis of POJK 30/2024 against the Joint Forum framework and four Asian regulatory models. The study identifies the Operational PIKK conflict-of-interest issue as a novel structural risk not previously discussed in the literature, and positions Indonesia's trajectory most closely along South Korea's 2018–2021 regulatory evolution.