While global headwinds have dampened the appetite of most business players for expansion, state lender Bank Negara Indonesia (BNI) sees no reason to hold back its plan to enter the South Korean market as the bank is about to finalize preparations for a new branch office in Seoul.

'€œWe have received a preliminary license [for the opening of the branch office] from the Korean financial authority, the Financial Supervisory Committee [FSC], in April this year after we filed an application in October last year,'€ BNI president director Achmad Baiquni told a media briefing in Seoul over the weekend.

'€œOur objective is to facilitate financial transactions between the two countries, considering Korea'€™s huge potential as one of the key trading partners for Indonesia,'€ Baiquni said.

According to Baiquni, the new branch, which would become BNI'€™s sixth overseas branch, would start operations by early October this year.

Occupying 300 square meters of space and situated in the Jung Business District in the heart of Seoul, the branch office will be providing full services to customers, ranging from trade finance, remittances, offshore loans and conventional funding to treasury business.

Baiquni expected that more than 2,700 Korean firms partnering with Indonesian counterparts and more than 50,000 Korean expatriates working in Indonesia would be able to benefit from the network of services BNI has via its 1,775 outlets in 34 provinces and 420 regencies or cities across the archipelago.

During an investment gathering attended by leading Korean business players in Seoul, Vice President Jusuf Kalla also signed an inscription to mark the presence of a BNI branch in Korea.

'€œIndonesia and Korea have shared many similarities with both having struggled for independence and developed as nations in the last 70 years,'€ Kalla said.

Kalla invited Korean businesses to take bigger roles in many infrastructure projects in Indonesia and to forge cooperation with Indonesian firms, promising to lend full support through a series of bureacratic reforms and investment stimulus.

According to data from the Coordinating Investment Board (BKPM), South Korea stood as Indonesia'€™s fourth-largest foreign investor in the first half of this year with a total investment of US$787.8 million in 1,026 projects. Southeast Asia'€™s largest economy'€™s realized investment rose 16.6 percent to Rp 259.7 trillion ($18.4 billion) year-on-year in the first six months of this year, with foreign direct investment accounting for Rp 174.2 trillion, or 67 percent of the total.

Separately, on the sidelines of the visit to the planned branch office, Indonesian Financial Services Authority (OJK) chairman Muliaman D. Hadad said the operation of the branch office was possible after the OJK and the Korean FSC signed a memorandum of understanding late last year to boost cooperation between the two markets in the financial sector.

'€œWe expect that the presence of BNI in Seoul also signaled Indonesia'€™s commitment to materializing the agreement,'€ he said.

Muliaman also asked BNI to push further with the establishment of a dedicated Korean desk to focus on facilitating economic and investment relationships between Indonesia and Korea.

'€œWe [the OJK] will call on Indonesian companies to enter the Korean market to follow up BNI'€™s suit since the banking sector would only grow sustainably if the real sector is also thriving,'€ Muliaman said.

In addition to Korea, Muliaman added, the OJK was in talks with some other financial authorities in Malaysia, Singapore, Myanmar, Cambodia and Vietnam to boost the presence of Indonesian banks in those markets.

'€œOur banks have all the capacity to explore huge opportunities overseas, especially in the ASEAN region, without necessarily lowering their efforts to tap into the domestic market. We expect that the Indonesian banks would be able play a greater role in the regional economy and also rise to become leading regional players in the banking industry,'€ he added.

According to BNI'€™s Achmad Baiquni, BNI currently has five branch offices abroad in London, New York, Tokyo, Singapore and Hong Kong in addition to remittance representatives in Malaysia, Qatar, Bahrain, Saudi Arabia and the Netherlands.

Baiquni also said that BNI hoped that the new branch would cater to the huge potential of the remittance business from nearly 50,000 Indonesian workers in Korea.

According to data from the Agency for the Placement and Protection of Indonesian Migrant Workers (BNP2TKI), Indonesian workers in Korea are among the highest paid Indonesian overseas workers, with each pocketing an average of $25,000 per year. Therefore, the total potential remittance business ranges from $1 billion to $1.2 billion annually, yet the realization only stood at $280 million as of last year since most workers only send home a meager 25 percent of their salary, using the rest of for own consumption.

BNP2TKI head Nusron Wahid welcomed the presence of the bank in Korea, pushing the bank to help raise the migrant workers'€™ financial literacy.

'€œThe bank might come up with services that allow the migrant workers manage the money they wire to their family back home. For example, they might be able to keep some part of the funds for their own pension fund or life insurance to prevent it from being used up by their family for consumption,'€ Nusron said.

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