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The government plans to resubmit draft bills for the establishment of a couple of financial safeguards to the House of Representatives before the end of October, as it seeks to set up a stronger legal framework to take any necessary moves amid prospects of recession in developed countries.

The Financial Services Supervisory Authority (OJK) was designed to take over responsibility for supervising the banking sector from Bank Indonesia as well as absorb the Capital Market and Financial Institutions Supervisory Board (Bapepam-LK).

The Financial System Safety Net (JPSK) is a protocol to handle a possible financial crisis.

Finance Minister Agus Martowardojo said on Monday that the revised draft bills were being finalized and will be sent to lawmakers before their current sitting period ends on Oct. 28.

International investors have been putting money into Indonesian bonds and equities as the nation’s economy continues to grow on domestic spending. The economy is forecast to expand 6.7 percent in 2012, after a projected 6.5 percent growth this year.

“There has been a large capital inflow into Indonesia. We now only have memorandums of understanding [between government agencies] for when the worst-case scenario materializes. These are not enough,” Agus said. Among other deals, he was referring to a MoU between the government, the central bank and the Deposit Insurance Agency (LPS) about a protocol to mitigate the impact of a financial crisis.

Agus did not disclose details of the new drafts.

Harry Azhar Azis, deputy chairman of House Commission XI, which oversees financial affairs, said on Monday that the government should focus on the OJK draft bill first before proceeding with that for the JPSK.

“The [previous] JPSK draft bill assumed that the OJK was already established. Moreover, the OJK draft bill also implied a crisis protocol agreed on by Bank Indonesia, the government, the LPS and the OJK,” Harry said.

“House approval would depend on the principle that the OJK would be independent,” he added. “And that would determine the fate of JPSK draft bill as well.”

In June, the OJK draft bill was rejected by the House due to disagreement over the selection of OJK board members as proposed by the government.

The draft said board members should include officials from the government and BI to ensure smooth coordination. Lawmakers said such a composition would be unfair and would mean the body would not be independent from the central bank and the government.

The JPSK bill originated from a government regulation in lieu of law (perppu) issued in October 2008. That perppu allowed the president to establish the Financial System Stability Committee (KKSK), which decided to bail out Bank Century a month later.

However, the House rejected the draft in December 2008 due to concerns it would hand too much power to a select number of government officials whom lawmakers feared might use the law to bail out business associates.

Another draft was rejected in early 2009, over an article that some legislators claimed was inserted to legitimize the Bank Century bailout after the fact.