American Express confident with RI's banking system

JAKARTA (JP): American Express Co. (Amex), a multinational travel and financial services firm of the United States, has confidence in the Indonesian government's handling of current problems in the banking industry, the company's president said.

"I'm confident that the banking problems will be solved," Jeffrey E. Stiefler, Amex's president, told newsmen here yesterday.

Standard & Poor's, a New York-based credit rating company, had assessed the Indonesian banking sector as "a high risk environment" and "undergoing a period of financial stress" following the government's 1988 policy allowing rapid expansion of the industry.

Regardless of the ominous report, Stiefler stated that he is confident with future prospects for Indonesia's banking sector.

"We are optimistic about the way your central bank is handling this matter," he said.

Stiefler acknowledged that the Indonesian banking system may have some "credit quality problems" and an "overcapacity in the market."

The government's deregulation measures of the banking sector in 1988 have led to a rapid expansion of private commercial banks in the country. Indonesia has around 200 commercial banks.

The American executive reasserted his optimism. "I'm not terribly disturbed by these problems," he said.

"It is only a small misstep which will be resolved quickly," Stiefler added.

He also stated that his company's business in Indonesia "is not affected by the problems described by Standard & Poor's."

Stiefler declined to disclose projections for Amex's banking and travel operations in Indonesia. He also refused to state the figures on the average annual spending of Indonesian Amex card holders.

Tourism

Stiefler said Amex enjoys steady growth in its banking and travel operations in Indonesia.

Amex has formed a 10-year strategic alliance with the Indonesian Tourism Promotion Board (BPPI). The company donates US$500,000 annually to the Board for tourism promotion program. Under the program the Amex Card which is accepted by 3.6 million merchants around the world, including 8,000 in Indonesia, is named the official travel card during the Visit Indonesia Decade.

Indonesia's tourism generally lags behind other countries in the region including Thailand and Singapore.

G. Bill Pardos, the company's vice president in charge of travel services in Indonesia, explained that the Indonesian government has been committed to balancing the growth in tourism with "ecological and cultural considerations."

The government has said it wants to increase the number of tourists visiting Indonesia to 3.9 million this year from 3.4 million last year.

Amex, which registered total assets of $94 billion as of last year, posted $353 million in net incomes from all of its worldwide operations in the first quarter of this year, compared to $243 million in the same period last year. (04)