Bank Indonesia Regulation Party Invites Foreign Entry

Stakeholders want any restrictions on foreign ownership of shares of the national banks in this country have to bite the fingers.

Bank Indonesia Regulation (PBI) No. 14 / 8/PBI/2012 of Shareholding Commercial Banks perpetuating the permissibility of foreign control of banking business in the country.


At the only written regulations, ownership of 40 percent of the bank's capital to shareholders bank financial institutions legal and non-bank financial institutions. Meanwhile, for the category of shareholders in the form of a legal entity is not a financial institution, the amount of 30 percent.

As for the category of individual shareholders in conventional banks, the limit of 20 percent of the bank's capital. Designated maximum stake for category individual shareholder in Islamic banks, the amount of 25 percent of the bank's capital.

What if there are institutions both local and foreign banks who want to have a stake in the bank above the specified limits? The answer, still allowed with permission from Bank Indonesia. During this time too, so the transfer of ownership of the banking license from the central bank, such as DBS Holdings plans to take control of Bank Danamon.

When this rule is discussed plans public, expectations of the public, especially stakeholders in the banking sector is foreign ownership restrictions, as do many states. For example, in Malaysia a maximum of 30 percent. Apparently issued by BI in no way associated with it.

Regulations that are applicable both launched for owners of foreign and domestic capital. That is, foreigners are allowed 99 per cent as it is now.

It is precisely this policy issued implicitly invite the entry of foreign parties, as stipulated in Article 11. If an owner of capital or institutions that have a stake greater than the limit mentioned above, have a duty to maintain the health of their bank is in category 1 and 2. Its size is a bank soundness (capital) and corporate governance (GCG). If below that, in the category of 3 to 5, the excess shares had to be sold.

The question is who is able to buy when it should be sold? Maybe if interested many. But that is capable, as occurred during this time, the foreign investors.

The experience can be seen to the policies contained in the Indonesian Banking Architecture (API) issued in 2004. Bank Indonesia raised the minimum capital adequacy ratio of the banking system. The target bank consolidation occurs, for example through the merger, so the number of banks in Indonesia will be reduced.

In fact what happens is the small banks foreign annexed. Consolidation through mergers, as expected by the Bank of Indonesia, did not happen.

As a result, foreign ownership in Indonesian banks even more steady. Even in terms of assets, of the 10 largest banks in Indonesia, six places filled by banks owned by foreign investors: BCA (Mauritius), CIMB Niaga (Malaysia), Danamon (Singapore), Panin (Australia), A (UK), BII (Malaysia). The rest is occupied by a bank red plate.

Now, due to new regulations issued, the Governor of Bank Indonesia Nasution said, more than 10 banks would divest. Pemodalnya will reduce the amount of ownership because the performance of the company under two categories - the size of capital and corporate governance (GCG) - as mentioned above.

This is where the foreigners have new opportunities to enter the exotic Indonesian market. With the size of a large population, the middle class continues to grow, the economy is good, plus 49 percent of the public still untapped banking services.

Foreign domination in the banking sector should be observed, given the banking industry controls more than 80 percent of financial assets in the country. Especially when considering the statement of Thomas Jefferson, the former U.S. president: "I believe that banking institutions are more dangerous to our liberties than facing an army."

What do you think about Indonesian laws do not restrict foreign ownership in the shares of national banks - but instead invite their entry?
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