Chairman of the House of Representatives' Legislation Body (Baleg) Ignatius Mulyono told The Jakarta Post recently that the amendment was among 40 bills that were unlikely to be passed by the current House, which is set to leave after Sept 30.

"Around 40 bills are unlikely to be passed [...]that includes the amendment to the Banking Law," Ignatius said.

As there exists no clear carry-over mechanism, incoming legislators will have to start from scratch should they wish to continue with the deliberation of the amendment.

The amendment is aimed at restricting the operation of foreign banks, setting a deadline for them to become legal entities in the form of Perseroan Terbatas (PT), or limited liabilities company, and capping the level of foreign ownership.

While the clause would translate into better protection for the banking sector against banking crises overseas, it would affect the operations of many foreign banks currently in the country, some of which continue to operate under branch status (KCBA), such as Citibank, Deutsche Bank, HSBC, JPMorgan Chase and Standard Chartered.

New foreign investment in the banking sector may well be deterred by the bill, which would be ill-timed as Indonesia is trying to enlarge the size of its banking industry to support its fast-growing economy.

Deputy chairman of House Commission XI on finance and banking Harry Azhar Azis said in mid July that the amendment could be passed into law by Sept. 30 at the earliest. (ren)

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