Wednesday, 18 July 2012


The national banking sector must be prepared for the ASEAN Economic Community (AEC) 2015. Indonesia’s market which was geographically expansive with highest number of population must be a target of expansion for foreign banks.

For that matter before MEA 2015 was applied, regulations for the banking sector must be tightened to allow national banks to grow and prepare themselves. The measure would be Bank Indonesia must tighten regulations for foreign banks.

Public support came by the hordes for BI’s plan to restrict shares ownership in all banks in Indonesia. Supposedly BI controlled the ownership structure of shares of banks in Indonesia particularly foreign ownership. The prevailing foreign ownership in national banks was clear indication that the banking sector in Indonesia was highly prospective.

As told, BI was now preparing a regulation to restrict ownership in national banks. As planned, the new regulation which was to be released by end of July would restrict ownership percentage to maximum 40% for financial institutions of the banking sector, 30% or non-bank institutions and 20% by personal ownership and families.

If the new regulation were actually released, the public was hoping that the rules was nit only applicable the retro-active way. If BI rules were retro active it would be most heartening and be widely acclaimed by the public because it was being awaited for.

In addition to the above, the public also expected application of the multiple license principle on foreign banks. The way it was happening today the single license principle was applied which made it easy for foreign banks and joint-venture banks to expand business in Indonesia. In the neighboring countries, the system being applied was multiple license.

Many circles encouraged BI to apply multiple license as implementation of the reciprocal principle. BI was urged to make a sound regulation on expansion of foreign banks and joint venture banks. Fox example if they planned to open a branch in the region, they should first consider the impact on People’s Credit Bank (BPR) which operated there.

It should never happen that the presence of foreign banks or joint venture banks stopped BPR efforts which served the interest of email business and macro business. Protection through policies would safeguard national interest which must not be scarified even in the name of globalization or liberalization.

In line with the effort to restrict ownership of shares by foreign or joint venture banks and confine their operation zones, the Government was also expected to pay more attention to medium, small and micro business (UMKM) who were the backbone of national economy and whose number came to tens of millions. It was about time that UMKM got special attention from national banks.

Therefore skim credit for UMKM group must be procured considering various factors about which they often complained. Easy access to credit within the context of financial inclusion must be facilitated because the potential of national UMKM was tremendous.

The role of UMKM was not just as economy bumper in time of crisis but also as shockbreaker during overheating of the economic machine. The economy machine would cool down if the role of big scale business were lessened and the small business which by far outnumbered big business be constantly enhanced.

If the banking sector adopted such policy, the concept of financial inclusion which was today being clamored would be more successful. The business sector as business incubator would give its sound support. For that matter, the banking sector as regulator could maintain collaboration with banking associations and business associations in promoting UMKM accessibility to banks.

It was about time that the Tabunganku (my savings account) product as incentive for the lower segment people be jacked up higher to drum up more saving accounts which means that more and more people could benefit from banking services. The more banks being active in releasing the Tabunganku product, the sooner the application of financial inclusion (program) nationwide.

The faster the process was exercised, the better because by the time MEA 2015 was applied the UMKM circles in Indonesia would be ready to welcome it. One thing to be cautious about was the heavy inflow of products from ASEAN 5 countries (which included Indonesia) i.e. Singapore, Thailand, Malaysia and the Philippine. These four nations included in ASEAN-5 were by far more ready to face the MEA 2015 compared the next ASEAN-5 states like Vietnam, Laos, Myanmar, Cambodia and Brunei Darussalam.

The five last mentioned states were relatively left behind compared to the first mentioned ASEAN 5 who were the pioneers of ASEAN establishment. Within the context of MEA 2015 the traffic of people, goods and capital would be more free to move in and out of ASEAN 10. Unless Indonesian businesspeople prepare themselves, it was feared that their products would lose competition with that of other ASEAN states.

In this case to facilitate access to financial institutions especially would be the key factor, not just to realize the financial inclusion program but also to help national business people to face MEA 2015.  

Business News - July 13, 2012     

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