Merging State-Owned Banks is Dangerous

Fitri Novia Heriani, Andin Aditya Rahman

Indonesian Banks Association (Perbanas) has previously suggested in a public hearing at the House of Representatives that state-owned banks should merge to form an international scale state-owned bank, or at least the biggest bank in Asia.

In response, during a discussion in Jakarta, Tuesday (14/5), BNI President Director Gatot Suwondo stated that “it is dangerous to merge state-owned banks, which will result in certain consequences.”

According to Gatot, merging state-owned banks will repeat the same mistake made during the 1998 monetary crisis. At that time, the Government merged four state-owned banks that became Bank Mandiri, which resulted in a sharp reduction of overseas branch offices.

Consequently, this undermined the original purpose of merging state-owned banks, which was to create an international scale state-owned bank.

He also asserted that the objective to merge state-owned banks must be reaffirmed. If it aims to create a single multinational state-owned bank, the definition of a multinational corporation must be clear. For example, BNI has established branch offices in New York, London, Tokyo, Hong Kong, and Singapore.

“Is that what is meant by a multinational corporation?” Gatot asked.

On the other hand, economics expert Hendri Saparini asserted that state-owned banks were originally designed to support national economic development.

In Hendri’s opinion, the establishment of special state-owned banks holds a much more crucial contribution to Indonesia’s economic development. These special state-owned banks will focus on providing mortgages and agricultural loans.

“This is the problem with our banking structure. It is difficult for the general public to acquire loans for housing and agricultural purposes,” Hendri concluded.

(hot/jt)

Fitri Novia Heriani, Andin Aditya Rahman

Indonesian Banks Association (Perbanas) has previously suggested in a public hearing at the House of Representatives that state-owned banks should merge to form an international scale state-owned bank, or at least the biggest bank in Asia.

In response, during a discussion in Jakarta, Tuesday (14/5), BNI President Director Gatot Suwondo stated that “it is dangerous to merge state-owned banks, which will result in certain consequences.”

According to Gatot, merging state-owned banks will repeat the same mistake made during the 1998 monetary crisis. At that time, the Government merged four state-owned banks that became Bank Mandiri, which resulted in a sharp reduction of overseas branch offices.

Consequently, this undermined the original purpose of merging state-owned banks, which was to create an international scale state-owned bank.

He also asserted that the objective to merge state-owned banks must be reaffirmed. If it aims to create a single multinational state-owned bank, the definition of a multinational corporation must be clear. For example, BNI has established branch offices in New York, London, Tokyo, Hong Kong, and Singapore.

“Is that what is meant by a multinational corporation?” Gatot asked.

On the other hand, economics expert Hendri Saparini asserted that state-owned banks were originally designed to support national economic development.

In Hendri’s opinion, the establishment of special state-owned banks holds a much more crucial contribution to Indonesia’s economic development. These special state-owned banks will focus on providing mortgages and agricultural loans.

“This is the problem with our banking structure. It is difficult for the general public to acquire loans for housing and agricultural purposes,” Hendri concluded.

(hot/jt)

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