OJK to Expand Banking Industry, Aims for Thailand

Financial Services Authority (OJK) Chairman Muliaman D. Hadad said that the OJK is in the process of exploring the possibilities of expanding Indonesian banking industry overseas.

“The most possible [cooperation] is with Thailand, because there have been two or three meetings,” Muliaman said.

Muliaman said that similar cooperation will also be established with other countries. Muliaman explained that Thailand serves as an important stepping stone to establish cooperation with Cambodia, Vietnam, Laos, and Myanmar. “Why Thailand? Because Thailand has dominant business [partnership] with its neighbouring countries,” Muliaman added.

Muliaman said that there are lots of possibilities for Indonesia to expand its financial industry to Thailand. Moreover, several of Indonesian business sectors have started to expand to Thailand, including property and trade.

Aviliani, an economist from the Institute for Development of Economics and Finance (Indef) praised OJK’s plan to integrate the national banking industry with ASEAN. Aviliani said that the integration is important to allow Indonesian banks to open branch offices and conduct business activities in neighbouring countries. However, Aviliani asserted that the policy may not always favour the banking industry. “Banks will always reflect on market potential,” Aviliani said.

Aviliani added that the potential for overseas banking market is not quite as large as the domestic market. “Opening [branch offices] overseas will be difficult if [banks] cannot profit. But when foreign banks expand to Indonesia they will reap benefits because [Indonesia] has a large market potential,” Aviliani said.