Indonesia’s BRI Signs Partnership Agreement With Alipay
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Bank Rakyat Indonesia, Indonesia’s biggest state-owned lender, started the year with key strategic announcements, including an alliance with Chinese payment platform Alipay and plans to acquire a local insurance company and a small lender. BRI signed a memorandum of understanding with Alipay, a subsidiary of Chinese technology giant Alibaba, on Thursday to secure an opportunity to serve the growing number of Chinese tourists visiting Indonesia.
“As China has its own payment system, we must be able to facilitate their [Chinese tourists’] needs. This move is aimed at supporting the country’s tourism industry,” Handayani, consumer director at BRI, said after an extraordinary shareholder meeting on Thursday.
He said there are several matters that must still be discussed, including the acquisition of a permit.
“We are currently integrating the business operation. We are now developing the IT system [for the service],” Handayani said, adding that the payment service will be launched in tourism areas, such as Bali, first.
About 2 million Chinese tourists visited Indonesia between January and November last year, representing a 14 percent increase from the corresponding period in 2017.
Insurance Company
In addition to the partnership with Alipay, the lender has also set aside Rp 1.5 trillion ($105 million) this year to acquire an insurance company focused on covering property damage. BRI currently only has a life insurer, BRI Life.”This year, we want to have an insurance company. We are going to have a complete service in the financial industry,” BRI president director Suprajarto said.
He said BRI was still observing the market and exploring several candidates before making a choice. The acquisition is slated for completion in the first half of this year, he added.
Suprajarto said the acquisition of a general insurer would take precedence over the plan to acquire a small lender.
“It requires a large amount of funding, so we are now focusing on organic growth [instead of acquiring another lender],”
This is because the Financial Services Authority (OJK) has asked BRI to acquire a lender in the categories BUKU I (banks with core capital below Rp 1 trillion) or BUKU II (banks with core capital between Rp 1 trillion and Rp 5 trillion).
“It requires a large amount of funding, so we are now focusing on organic growth [instead of acquiring another lender],” Suprajarto said.
BRI posted Rp 23.5 trillion in net profit in the first nine months of last year, which was 15 percent higher than the same period in 2017, thanks to a 17 percent surge in loan growth to Rp 809 trillion between January and September.
BRI Appoints Deputy President Director
BRI also announced the appointment of Sunarso as deputy president director and the dismissal of Jeffry J. Wurangian as commissioner and Kuswiyoto as director of corporate banking.Handayani said the changes were subject to approval by central bank.
Questions & Answers
Q.What is the primary reason for BRI's partnership agreement with Alipay?
What is the primary reason for BRI's partnership agreement with Alipay?
BRI signed the memorandum of understanding with Alipay to facilitate Chinese tourists' payment needs in Indonesia. This move aims to support Indonesia's tourism industry, as China has its own payment system.
Q.When does BRI expect to launch the payment service developed with Alipay?
When does BRI expect to launch the payment service developed with Alipay?
BRI is currently integrating the business operation and developing the IT system for the service. It will be launched initially in tourism areas, such as Bali, but no specific date is mentioned.
Q.Why has BRI prioritised acquiring an insurance company over another lender this year?
Why has BRI prioritised acquiring an insurance company over another lender this year?
The acquisition of a general insurer takes precedence because the Financial Services Authority (OJK) asked BRI to acquire a BUKU I or BUKU II lender, which requires a large amount of funding.
Q.Which new appointments or dismissals did BRI announce in conjunction with these strategic plans?
Which new appointments or dismissals did BRI announce in conjunction with these strategic plans?
BRI announced the appointment of Sunarso as deputy president director. Also, Jeffry J. Wurangian was dismissed as commissioner and Kuswiyoto as director of corporate banking. These changes await central bank approval.
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