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Ada Pertanyaan? Hubungi Kami Marcell Sihombing, Nanda Narendra
As a major player in the Association of Southeast Asian Nations (ASEAN), Indonesia is looking to accelerate its preparations for the launch of the upcoming ASEAN Economic Community (AEC). As regional market integration under the auspices of the AEC draws ever nearer, the country needs to pull out all the stops in order to adequately prepare itself for the forthcoming economic union.
Muliaman D. Hadad, the Head of the Financial Services Authority’s (OJK) Board of Commissioners, believes that the integration of Indonesia’s banking sector into the AEC market must be prioritized. Moreover, such integration is laid out under the ASEAN Financial Integration Framework (AFIF).
“Actually, the ASEAN integrated-banking sector doesn’t get underway until 2020, so there are still four to five years left until we see its implementation. However, there is an urgent need to begin the process of cooperation and of integrating our banking sector with ASEAN, since such integration offers great benefits for our economic relations,” explained Mr. Hadad in Jakarta on 12 October 2015.
Despite the fact that the OJK is looking to encourage the country’s domestic banking sector to accelerate its expansion into the AEC market, Mr. Hadad has also reminded banks that they should keep the ASEAN Banking Integration Framework (ABIF) – an agreement made by the financial authorities of several ASEAN member countries – into consideration when doing so.
Mr. Hadad has also declared that his institution is prepared to support banks in relation to their legal-protection framework. “For the time being however,” continued Mr. Hadad, “domestic banks may utilize a bilateral agreement mechanism in order to establish business relations with other ASEAN member countries.
“While we await the implementation of the AFIF, which will require more time, we can still enter into bilateral agreements with willing member countries. It does not have to be a multilateral framework, as we can enter into bilateral agreements should we feel ready to establish a business relationship with a particular ASEAN member country,” asserted Mr. Hadad.
By way of example, Mr. Hadad revealed that Indonesia had already entered into a bilateral agreement with Malaysia, and was currently engaged in discussions regarding an agreement with Singapore. In the near future, the OJK is also planning to forge similar agreements with other ASEAN member countries.
Additionally, such bilateral agreements must also be supported by Memoranda of Understanding (MoU) between the relevant countries. Mr. Hadad sought to emphasize, however, that such bilateral agreements did not give ASEAN member states carte blanche to do as they pleased, since member countries must conform to the ABIF framework.
Indonesia’s move to enter into MoUs with other member countries is being undertaken due to a pressing need to do so, and is being expedited by the longstanding trust that exists between Indonesia and a number of its neighbors.
Offering further insight, Mr. Hadad also emphasized that banks believing that they are ready to expand their businesses abroad should take the reciprocity principle into account, as the principle naturally also offers access to the Indonesian market for foreign banks. Therefore, it is imperative that the OJK balances the protection of domestic banks against their desire to expand their market beyond the national border.
“We will immediately establish inter-authority agreements in order to simplify and streamline the process, because such agreements are crucial,” explained Mr. Hadad.
Concurring with Mr. Hadad was Mulya E. Siregar, the OJK’s Deputy Commissioner of Banking Oversight, who told Hukum online that domestic banking industries had no need to be overly worried as regards the “exchange” engendered by the implementation of any bilateral agreements and the reciprocity principle.
According to Mr. Siregar, ABIF guidelines already regulate a mechanism which prevents banks from other ASEAN member countries from automatically establishing their businesses on Indonesian soil, as such foreign banks are required to prioritize the balanced principle stipulated and agreed upon under the ABIF guidelines.
Moreover, foreign banks and domestic banks must be on the same footing in order to apply as a Qualified ASEAN Banks (QABs), which will enable them to operate within the territory of any country with which they enter into a bilateral agreement.
“Much like a soccer game, if another ASEAN member country has already scored three goals, then that country can only apply for more QABs when Indonesia has evened up the score to 3-3,” asserted Mr. Siregar.
Based on the above arguments, Mr. Siregar emphasized that the Indonesian banking sector had to exploit the ABIF provisions to their maximum benefit, as the forthcoming AEC would provide greater business opportunities for domestic banks. For example, Indonesian banks which previously only targeted their efforts in the Malaysian and Singaporean markets will now be able to expand their horizons and try to penetrate the markets of other ASEAN member countries, such as Myanmar, Cambodia, the Philippines and Vietnam.
“The ABIF framework is the highway of the AEC and serves to remind us that, AEC or no AEC, the domestic banking sector must be improved,” concluded Mr. Siregar.
(sp)
Marcell Sihombing, Nanda Narendra
As a major player in the Association of Southeast Asian Nations (ASEAN), Indonesia is looking to accelerate its preparations for the launch of the upcoming ASEAN Economic Community (AEC). As regional market integration under the auspices of the AEC draws ever nearer, the country needs to pull out all the stops in order to adequately prepare itself for the forthcoming economic union.
Muliaman D. Hadad, the Head of the Financial Services Authority’s (OJK) Board of Commissioners, believes that the integration of Indonesia’s banking sector into the AEC market must be prioritized. Moreover, such integration is laid out under the ASEAN Financial Integration Framework (AFIF).
“Actually, the ASEAN integrated-banking sector doesn’t get underway until 2020, so there are still four to five years left until we see its implementation. However, there is an urgent need to begin the process of cooperation and of integrating our banking sector with ASEAN, since such integration offers great benefits for our economic relations,” explained Mr. Hadad in Jakarta on 12 October 2015.
Despite the fact that the OJK is looking to encourage the country’s domestic banking sector to accelerate its expansion into the AEC market, Mr. Hadad has also reminded banks that they should keep the ASEAN Banking Integration Framework (ABIF) – an agreement made by the financial authorities of several ASEAN member countries – into consideration when doing so.
Mr. Hadad has also declared that his institution is prepared to support banks in relation to their legal-protection framework. “For the time being however,” continued Mr. Hadad, “domestic banks may utilize a bilateral agreement mechanism in order to establish business relations with other ASEAN member countries.
“While we await the implementation of the AFIF, which will require more time, we can still enter into bilateral agreements with willing member countries. It does not have to be a multilateral framework, as we can enter into bilateral agreements should we feel ready to establish a business relationship with a particular ASEAN member country,” asserted Mr. Hadad.
By way of example, Mr. Hadad revealed that Indonesia had already entered into a bilateral agreement with Malaysia, and was currently engaged in discussions regarding an agreement with Singapore. In the near future, the OJK is also planning to forge similar agreements with other ASEAN member countries.
Additionally, such bilateral agreements must also be supported by Memoranda of Understanding (MoU) between the relevant countries. Mr. Hadad sought to emphasize, however, that such bilateral agreements did not give ASEAN member states carte blanche to do as they pleased, since member countries must conform to the ABIF framework.
Indonesia’s move to enter into MoUs with other member countries is being undertaken due to a pressing need to do so, and is being expedited by the longstanding trust that exists between Indonesia and a number of its neighbors.
Offering further insight, Mr. Hadad also emphasized that banks believing that they are ready to expand their businesses abroad should take the reciprocity principle into account, as the principle naturally also offers access to the Indonesian market for foreign banks. Therefore, it is imperative that the OJK balances the protection of domestic banks against their desire to expand their market beyond the national border.
“We will immediately establish inter-authority agreements in order to simplify and streamline the process, because such agreements are crucial,” explained Mr. Hadad.
Concurring with Mr. Hadad was Mulya E. Siregar, the OJK’s Deputy Commissioner of Banking Oversight, who told Hukum online that domestic banking industries had no need to be overly worried as regards the “exchange” engendered by the implementation of any bilateral agreements and the reciprocity principle.
According to Mr. Siregar, ABIF guidelines already regulate a mechanism which prevents banks from other ASEAN member countries from automatically establishing their businesses on Indonesian soil, as such foreign banks are required to prioritize the balanced principle stipulated and agreed upon under the ABIF guidelines.
Moreover, foreign banks and domestic banks must be on the same footing in order to apply as a Qualified ASEAN Banks (QABs), which will enable them to operate within the territory of any country with which they enter into a bilateral agreement.
“Much like a soccer game, if another ASEAN member country has already scored three goals, then that country can only apply for more QABs when Indonesia has evened up the score to 3-3,” asserted Mr. Siregar.
Based on the above arguments, Mr. Siregar emphasized that the Indonesian banking sector had to exploit the ABIF provisions to their maximum benefit, as the forthcoming AEC would provide greater business opportunities for domestic banks. For example, Indonesian banks which previously only targeted their efforts in the Malaysian and Singaporean markets will now be able to expand their horizons and try to penetrate the markets of other ASEAN member countries, such as Myanmar, Cambodia, the Philippines and Vietnam.
“The ABIF framework is the highway of the AEC and serves to remind us that, AEC or no AEC, the domestic banking sector must be improved,” concluded Mr. Siregar.
(sp)