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hina’s largest insurer China Life Insurance (Overseas) Company Limited launched its operations in Indonesia on Wednesday, becoming the first Chinese insurer in the archipelagic country.

The company, a subsidiary of China Life Insurance Group, has long considered Indonesia a target of its expansion because of the country’s strategic position in Southeast Asia.

“We celebrate Indonesia’s 73rd anniversary as well as 68 years of its bilateral relationship with China this year. It represents a momentous opportunity for China Life to join the insurance industry in Indonesia,” said China Life Insurance Group president and vice chairman Yuan Changqing.

During his 2013 visit to Indonesia, Chinese president Xi Jinping proposed the “21st Century Maritime Silk Route”, which has attracted significant international interest.

China Life Insurance Group saw the initiative as an opportunity to promote positive relations with markets, industries and projects in countries included in the initiative, such as Indonesia, according to an official statement issued by the company.

“I am confident China Life Insurance Indonesia can optimise every opportunity to grow. I also expect it to integrate well with the Indonesian business community,” Changqing said, adding that he had requested regulatory support to ensure transparency and legal compliance.

Beijing-based China Life Insurance Group, which is 70 percent state-owned, is the biggest life insurer in China. Prior to this year’s roll-out in Indonesia, the company expanded to Hong Kong in 1984, Macau in 1989 and Singapore in 2015.

In 2017, the company’s premium revenue totalled over HKD70 billion (US$9 billion), while its total asset value was recorded at HKD300 billion. Its services encompass three main categories including life insurance, investment and provident funds.

Earlier this year, the Indonesian government issued a regulation on foreign-ownership of insurance companies in a bid to allow local players to flourish in the domestic market.

Previously, foreign investors were permitted to own more than 90 percent of insurance companies.

The newly issued Government Regulation (PP) No. 14/2018 on foreign ownership of insurance companies, capped the foreign ownership of insurance firms at 80 percent. The regulation, however, does not apply to publicly listed insurance firms.

Existing insurance firms with foreign ownership beyond the set limit are also exempted. However, future capital injections conducted by the firms should see at least 20 percent of fresh capital come from local investors.

Alternatively, a firm could also seek funds by conducting an initial public offering (IPO). The amount raised through the IPO should contribute at least 20 percent of the total new capital injection.

Finance Minister Sri Mulyani Indrawati said she hoped the domestic insurance industry would flourish following the issuance of the regulation, which could contribute to lowering the deficit recorded in the country’s external account — particularly from the services sector.

Data from the Financial Services Authority (OJK) reveals that a total of 46 insurance firms are partially foreign owned, 18 are over 80 percent foreign owned. The 10 largest life insurance firms according to premiums are dominated by joint ventures backed by multinational firms, including the United Kingdom’s Prudential, Canada’s Manulife Financial, Germany’s Allianz and Japan’s Mitsui Sumitomo Insurance Group. (rfa)