Ada Pertanyaan? Hubungi Kami 
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Ada Pertanyaan? Hubungi Kami Nadia Maharani, M Agus Yozami
With the Draft Bill on Banking currently being discussed at the House of Representatives, the proposal to require all banks in Indonesia to be established as an Indonesian entity has become the focus of discussions. Lawmakers support this idea, stating that it is one of many possible options to prevent another global economic crisis like in 2008.Contrary to the lawmakers, foreign banks are generally opposing this idea. Represented by the Foreign Bank Association of Indonesia (Perbina), the foreign banks have requested the parliament to eliminate thisobligation, especially forthe branch offices offoreign banks (kantor cabang bank asing).
Haryanto Budiman, Managing Director & Senior Country Officer of JP Morgan Chase Bank Indonesia, said that with under such obligation branch offices will not utilize the funds from their central office. Instead, they will compete with other banks by offering high interest rates, in order to collect third party funds (DPK) as much as possible.
In regard to preventing a crisis, Mr. Budiman said that changing the legal form of foreign banks is not the correct option. According to him, Indonesia has already implemented Capital Equivalency Maintained Assets (CEMA), which will prevent a systemic impact if a crisis hits a bank. Furthermore, all foreign banks in Indonesia are supervised under strict provisions, in particular Basel Committee rules, G-20 rules, and domestic laws and regulations of the respective bank.
Mr. Budiman also said that this plan may have a downside if reciprocal rights were to be implemented. According to him, if foreign countries decided to also regulate Indonesian bank branches overseas to be established as a legal entity, the capital cost would be immense and may negatively impact on local banks’ capital structure.
In addition to the legal form of foreign banks, Mr. Budiman also asked the parliament to reconsider the foreign ownership limits under the Draft Bill. According to him, such limitations will stop capital flows from overseas into the domestic financial industry. Limiting foreign ownership to 40% may also cause fluctuations in the local stock market.
Domestic bankers, however, have a different perspective toMr. Budiman. Represented by Zulkifli Zaini, General Chairman of Indonesian Bankers Association (IBI), domestic bankers said that foreign banks in Indonesia must be established as an Indonesian entitiy, in particular as a limited liability company (perseroan terbatas).
“This will keep the stability of financial activities and investors in finance management, and at the same time maintain national interests,” concluded Mr. Zaini.
(hot/kc)
Nadia Maharani, M Agus Yozami
With the Draft Bill on Banking currently being discussed at the House of Representatives, the proposal to require all banks in Indonesia to be established as an Indonesian entity has become the focus of discussions. Lawmakers support this idea, stating that it is one of many possible options to prevent another global economic crisis like in 2008.Contrary to the lawmakers, foreign banks are generally opposing this idea. Represented by the Foreign Bank Association of Indonesia (Perbina), the foreign banks have requested the parliament to eliminate thisobligation, especially forthe branch offices offoreign banks (kantor cabang bank asing).
Haryanto Budiman, Managing Director & Senior Country Officer of JP Morgan Chase Bank Indonesia, said that with under such obligation branch offices will not utilize the funds from their central office. Instead, they will compete with other banks by offering high interest rates, in order to collect third party funds (DPK) as much as possible.
In regard to preventing a crisis, Mr. Budiman said that changing the legal form of foreign banks is not the correct option. According to him, Indonesia has already implemented Capital Equivalency Maintained Assets (CEMA), which will prevent a systemic impact if a crisis hits a bank. Furthermore, all foreign banks in Indonesia are supervised under strict provisions, in particular Basel Committee rules, G-20 rules, and domestic laws and regulations of the respective bank.
Mr. Budiman also said that this plan may have a downside if reciprocal rights were to be implemented. According to him, if foreign countries decided to also regulate Indonesian bank branches overseas to be established as a legal entity, the capital cost would be immense and may negatively impact on local banks’ capital structure.
In addition to the legal form of foreign banks, Mr. Budiman also asked the parliament to reconsider the foreign ownership limits under the Draft Bill. According to him, such limitations will stop capital flows from overseas into the domestic financial industry. Limiting foreign ownership to 40% may also cause fluctuations in the local stock market.
Domestic bankers, however, have a different perspective toMr. Budiman. Represented by Zulkifli Zaini, General Chairman of Indonesian Bankers Association (IBI), domestic bankers said that foreign banks in Indonesia must be established as an Indonesian entitiy, in particular as a limited liability company (perseroan terbatas).
“This will keep the stability of financial activities and investors in finance management, and at the same time maintain national interests,” concluded Mr. Zaini.
(hot/kc)