Banking regulator the Financial Services Authority (OJK) is looking to sign new agreements with its counterparts in a number of countries this year, a move that will pave the way for overseas expansion for Indonesian lenders.

The countries include South Korea, China and the United Arab Emirates, as well as Southeast Asian neighbors such as Cambodia, Myanmar and Vietnam '€” where domestic banks have either a small presence or none at all, but where business potential remains untapped. A similar memorandum of understanding (MoU) was signed with Malaysia late last year.

OJK chairman Muliaman D. Hadad said on Tuesday that it expected to ink an MoU with its counterpart in South Korea in April, making it the first MoU to be signed this year.

'€œWe want to facilitate the planned business expansion of [state lender] BNI [Bank Negara Indonesia] in South Korea. We expect to see BNI obtain its business license right after the MoU is signed,'€ he told reporters after attending a press conference at the Finance Ministry.

Indonesian banks have often complained about strict requirements to expand business overseas, which is seen as not reciprocal when compared with foreign expansion of domestic banks in the past.

Part of the MoU with South Korea will highlight the reciprocal aspect between the two countries, which is expected to provide banking access to Indonesian lenders there equal to that enjoyed by South Korean banks in Indonesia, according to Muliaman.

There is only one South Korean bank operating in Indonesia at the moment: Bank KEB Hana, but there is also another lender with South Korean roots, Bank Woori Saudara Indonesia 1906.

Meanwhile, an MoU with China'€™s banking authority would enable state-owned Bank Mandiri to run wider business operations there. At present, Mandiri runs two offices in China, located in Shanghai and Hong Kong.

'€œMandiri already has operations in China, but wants to expand into activities in renminbi as well,'€ Muliaman said, adding that a schedule had yet to be determined for the MoU in China.

Further agreement are on the OJK'€™s agenda, as it plans to conduct roadshows to several Southeast Asian countries this year, including to Cambodia, Myanmar and Vietnam. '€œWe want to invite Indonesian bankers to join,'€ he said.

BNI international banking division head Abdullah Firman Wibowo said that the bank was targeting remittance and trade finance businesses by opening a full branch in Seoul, South Korea.

'€œIn the first stage, we are looking to acquire what is called a preliminary license. We will be given three months to complete our SOP [standard operating procedure], infrastructure and other related aspects,'€ he said in a telephone interview.

It was only in the second stage that BNI hoped to obtain a main license, Firman said, adding that it might allocate an equivalent of US$20 million to $30 million as initial operational capital for the branch.

Meanwhile, Mandiri treasury and market director Royke Tumilaar said that the lender expected to begin running renminbi-related businesses in China in the third or fourth quarter of the year.

'€œThe products will be related to transaction banking activities, but we hope to be able to gather customers'€™ funds as well,'€ he said.

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