Foreign Banks Targeting Indonesian Banking Market

Bogor, West Java (Antara Bali) - PT Bank Negara Indonesias chief economist Ryan Kiryanto said here on Saturday that foreign banks are eyeing further expansion into Indonesia's banking sector.

"Many public funds have yet to enter banks and many regions in Indonesia still lack banks or have no banks," he said.

He added that foreign banks have sought to enter the local market due to the implementation of the ASEAN Economic Community (MEA) in the financial sector in 2020.

Ryan further said the ratio between third party funds and the countrys Gross Domestic Product has reached only 37.5 percent, or some Rp3,500 trillion of the GDP.

Meanwhile, in Singapore the ratio is 147.9 percent, while in Malaysia it is 62.4 percent, Thailand 110.41 percent, the Philippines 46.6 percent and Vietnam 34.7 percent.

In terms of credit, Ryan said, the volume of distribution of bank credits in Indonesia has reached only 20.6 percent of the GDP, while in Singapore it is 120.6 percent, Malaysia 117 percent and Thailand 85 percent.

He added that banking markets in Singapore, Thailand and Malaysia have already been saturated and therefore they turned to Indonesia.

"So, Indonesian banks had better focus on the domestic market and make foreign expansion their second choice," he said.

He noted that national banks need to secure their own market segments that have not yet been fully exploited.

"It must not happen that while they are seeking to penetrate foreign markets that have been saturated, their own markets are being exploited by foreign banks," he said. (WDY)