Financial Services Sector

An Expert's View about Banking, Finance and Insurance in Indonesia

Posted on: 26 May 2012

Foreign banks can establish a new bank, open a local branch or buy into existing local banks with up to 99% foreign ownership limit.

Financial Services Sector in Indonesia Indonesia is an open market for the financial services sector. Huge potential growth in banking (conventional and Islamic), insurance (particularly life segment) and capital market. Market overview Indonesia’s economic growth continues to be strong at 6.5% in 2011 and predicted to reach 6.1%-6.3%% in 2012, and is South East Asia’s largest economy. There are 122 banks with more than 13,000 branches in Indonesia. These consist of state-owned banks, local private banks (foreign exchange and non-foreign exchange licensed banks), foreign banks and the regional development banks. Bank Indonesia (Central Bank) has the authority to issue policy rules and regulations. In October 2011, Indonesia’s Parliament passed long-awaited law to establish a financial services regulator (OJK) which will have supervisory and regulatory oversight of banks, NBFIs and financial markets. The OJK is expected to start operating in 2013. Apart from Bank Indonesia, there are several other regulatory bodies which have influence over the banking system. The Indonesian Capital Market and Financial Institution Agency (BAPEPAM-LK) and Indonesia Stock Exchange also have a significant regulatory role, particularly in relation to the settlement of marketable securities and related accounts. Foreign banks can establish a new bank, open a local branch or buy into existing local banks with up to 99% foreign ownership limit. Key opportunities ξ Continuous growth of middle class in recent years offers huge opportunities for priority banking product. ξ Banks are increasingly focusing on providing better services and product innovation to their customers. Consequently, many banks continue to invest in IT-based banking systems and software. ξ Considering the size of the Muslim population in Indonesia and the growth of the Islamic banking sector over the past 5 years, strategic investment and partnerships are to be fund in expanding the product base that Sharia banks are able to offer to customers. Limited knowledge of more sophisticated banking products presents collaboration opportunities. Latest export opportunities – Financial & Professional Services Latest export opportunities - Indonesia Getting into the market There are various methods of entry into Indonesia’s Banking Sector: ξ Purchase of shares in banking entities; ξ Acquiring an existing bank; ξ Opening up a branch of a foreign bank; ξ Establishing a new bank; ξ Investing in Islamic banks. More about doing business in Indonesia Contacts Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS). To commission research or for general advice about the market, get in touch with our specialists in country - or contact your local international trade team. ξ Lian Jap, British Embassy Jakarta, Indonesia. Tel :+62 21 2356 5265, Fax : +62 21 2356 5352 or email : Contact your local international trade team Major Events 2nd Bank Indonesia International Seminar on Islamic Finance (Bandung, West Java, 7-8 May, 2012) UKTI Events UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows. Latest events – Financial & professional Services Latest events – Indonesia Useful links More about OMIS and other UKTI services for exporters
Posted: 26 May 2012

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