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tate-owned Bank Negara Indonesia (BNI) hopes more Japanese companies will deposit their funds in the state bank following a partnership agreement with Joyo Bank, the fifth largest Japanese regional lender.

Under an agreement signed in Jakarta on Wednesday, BNI, the only Indonesian bank with a branch in Japan, will provide a priority service to Joyo Bank’s clients in Indonesia, said Abdullah Firman Wibowo, BNI’s head of international division.

He hoped that with the privilege service, Joyo Bank’s clients in Indonesia would deposit their funds with BNI as well as carry out banking transactions through the state bank.

BNI currently manages Rp 1.35 trillion (US$141 million) in deposits owned by Japanese companies
operating in Indonesia.

Firman hopes to increase the figure to Rp 2 trillion by the end of this year.

Joyo Bank is the 40th Japanese regional bank to have signed a cooperation agreement with BNI since the state bank established the so- called “Japan Desk” early this year to improve services to Japanese investors doing business in Indonesia.

BNI has received deposits worth $20 million from Japanese firms since the establishment of the service.

“We expect more [third-party funds] from Japanese investors in the future, when our brand has become more recognized among them,” he told reporters after the signing of the agreement.

At least $48.8 billion worth of transactions are conducted by Japanese investors in Indonesia, making them a large potential market for Indonesian commercial banks who want to expand the business with foreign investors, Firman added.

“Suppose that fee-based income accounts for 1 or 2 percent of the transactions value; isn’t that a huge income for us?”

BNI’s director for treasury and financial institutions, Adi Setianto, believes that stronger relations between Indonesian and Japanese banks will not only benefit the banking industries in both countries, but also be a boon for Japanese companies and Indonesia’s manufacturing industry.

“At least 30 clients of Joyo Bank currently have local units in Indonesia. Hitachi is one of them,” he said, referring to a large diversified Japanese group manufacturing construction and telecommunication equipment.

“Therefore, we are here to offer them not just ordinary financial services like foreign exchange, but also services like investment updates and our macroeconomic analysis,” he said.

Joyo Bank president director Kazuyoshi Terakado said the deal would also be beneficial for his company as it might attract more Japanese investors to place their funds with the Ibaraki-based bank.

According to Terakado, there are at least 30 mid-scale companies depositing funds in Joyo Bank and he predicts that the deal with BNI might double the tally in the short-run.

“Some Japanese manufacturing companies have been eyeing opportunities to expand business in Indonesia, with its strong recent GDP growth, thanks to the country’s vast natural resources and strong domestic consumption of 240 million people,” he told reporters via an interpreter.

As of July, the assets of Joyo Bank were valued at 8 trillion yen (US$1.02 billion), almost three times larger than the assets of BNI, the fourth largest bank in Indonesia by assets.(sat)