Bank Indonesia to boost role of foreign banks
Bank Indonesia to boost role of foreign banks
The Jakarta Post, Jakarta
Bank Indonesia (BI) has vowed to seek ways to boost the role
of foreign banks in the country's struggling economy, especially
in the provision of investment and working capital loans.
BI Governor Burhanuddin Abdullah said on Monday that
currently, foreign banks still played a minimum and limited role
in supporting the nation's economy.
"From my point of view, the work of foreign banks is still
limited to treasury, credit cards, and consumer and trade
finance. Their role in providing more investment and working
capital loans should be our main objective," he said on the
sidelines of a seminar on the Indonesian Banking Landscape (API).
Burhanuddin was responding to questions about the increasing
ownership of local banks by foreign banks, including the
preponderance of foreign banks in the shortlist of bidders for a
51 stake in Bank Permata announced on Tuesday.
Some experts have expressed the fear that foreign banks would
focus on big businesses, particularly foreign-owned businesses,
and ignore small and medium enterprises, which are mostly owned
by locals. As result, the government's current efforts to
strengthen the small and medium sector could flounder due to a
lack of support from the banking sector.
Burhanuddin said that the real problem was not about whether a
bank was owned by foreign or local investors, but was rather
about finding ways to strengthen the banking sector so that it
could contribute more to the progress of the economy as a whole.
He added that full government ownership was not healthy for
the industry and the bank itself as it would mean that the
government would be the party exposed to all the risk.
"It's not good because it is the government who runs and also
supervises it. This way, the government becomes the party that
carries all the risk alone. Banks should be owned by the private
sector -- being owned by domestic banks would of course be
better, he said, adding that foreign ownership currently
accounted for about 30 percent of the equity in the country's
banks.