Banking Must Be Free from Political Intervention |

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Two important decisions were made by the Governor of Aceh, Muzakir Manaf, in Banda Aceh, Monday (17/3/2025). First, appointing Nasir Syamaun as the acting Regional Secretary of Aceh. The former Head of the Youth and Sports Service who was once a fencing athlete replaced Alhudri.

Second, Muzakir Manaf or Mualem appointed Fadhil Ilyas as the Acting President Director of PT Bank Aceh Syariah. Amidst various very dynamic regional, national, and global financial challenges, the presence of a new leader at Bank Aceh Syariah should provide new hope.

As a regional financial institution, Bank Aceh has a strategic role in supporting development at the local and even regional levels. Bank Aceh has made various innovations since transforming into a sharia bank in 2016, including in the development of digital transactions. The positive performance shown by Bank Aceh has made it increasingly trusted by the public and its assets have increased year after year. This performance can also be seen in the increase in assets to IDR 28.7 trillion as of June 2024 and the distribution of dividends to shareholders increased to IDR 300 billion in the 2024 financial year.

Amidst the increasingly unpromising national financial situation, which is marked by the increasing foreign funds leaving Indonesia, the challenges faced by financial institutions are increasingly complex. However, the challenges of state-owned banks are not only the economic and financial situation, but also political challenges that often disrupt financial performance.

The public knows that as a Regionally-Owned Enterprise (BUMD), Bank Aceh is not free from local political intervention. Financial parameters do not always determine banking performance, because sometimes political interests are more decisive. This problem needs to be a concern for local political elites.

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Bank Aceh must be allowed to work professionally, transparently, and accountably, even though its shares are owned by the Aceh Government, both at the provincial and district and city levels. The appointment of directors and commissioners, even leaders at the branch level, must be entirely based on considerations of competence and integrity, not just political pressure.

Local political elites must remember the risks they will face if they interfere too much in the professional work of banking, including weakening good corporate governance. Ultimately, it could open up opportunities for abuse of authority and corruption.

The direction of credit and financing, which should be based on professional considerations, is instead pressured to support projects that benefit certain groups. This practice not only harms the wider community, but also risks increasing non-performing loans (NPLs) that burden the bank's finances.

In order for Bank Aceh to grow as a professional and highly competitive financial institution, concrete steps must be taken. First, the recruitment process for directors and commissioners must be meritocratic with a strict and transparent selection mechanism.

Second, the local government as a shareholder must maintain the bank's independence by not interfering in its operational policies. Third, strengthening regulations and supervision from the Financial Services Authority (OJK) must be tightened to ensure that the principles of good governance are applied consistently.[]

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