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Foreign banks eye Indonesia's banking industry, says economist

Publication Date : 16-06-2014

 

Foreign lenders are targeting the Indonesian banking sector, which is deemed underexplored, particularly ahead of the implementation of the Asean Economic Community, according to PT Bank Negara Indonesia (BNI) chief economist Ryan Kiryanto.

“There is a lot of the public money that has not been put into banks, as seen by the fact that several parts of the country do not have banking service or have very limited access to one,” he said on Saturday.

He added that the ratio of third-party funds (DPK), at 3,5 trillion rupiah (US$296 million), only amounted to 37.5 per cent of GDP (gross domestic product). In comparison, Singapore has a 147.9-per cent ratio; Malaysia, 62.4 per cent; Thailand, 110.41 per cent, and the Philippines, 46.6 percent, Antara reported.

In terms of credit, Ryan added that the volume of bank credit distribution in Indonesia had reached only 20.6 per cent of GDP, compared to 120.6 per cent in Singapore and 117 per cent in Malaysia.

According to his analysis, the financial sectors in regional mainstays Singapore, Malaysia and Thailand have reached saturation point, thus the interest in Indonesia's financial sector.

“Banks in Indonesia should focus more on their domestic market first before expanding overseas. They should not penetrate other markets until they have strengthened their own,” he said.


 

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