TEMPO.CO, Jakarta - Bank Indonesia and the Financial Services Authority (OJK) are urging local banks to expand to ASEAN countries. Regional expansion is encouraged following the ASEAN Banking Integration Framework (ABIF) signed by the two regulators and Finance Minister Bambang Brodjonegoro.
The agreement is aimed at expediting bilateral partnerships in the banking sector ahead of the ASEAN Economic Community (AEC). With the ABIF, the penetration of Indonesian banks to the ASEAN market will be much easier as it is based on reciprocal principles.
The framework, BI Governor Agus Martowardojo said, will also encourage healthy competition between banks in the ASEAN region. If a foreign bank wishes to open branch in Indonesia, then its originating country must also allow an Indonesian bank to branch there.
As a preparatory measure, the central bank will push for banking consolidation to streamline the national banking structure. Of 118 banks operating in Indonesia, 20 of them dominate 73 percent of the market share.