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ndonesia’s credit card industry is bracing itself for another competitive year this year, given new regulations issued by the central bank and the scheduled return of a major player, Citibank Indonesia.

The Indonesian Credit Card Association (AKKI) predicts that the country will see the number of circulating credit cards grow by 5 percent to around 17 million this year from 2012. This modest growth is attributed to a Bank Indonesia (BI) regulation on credit card ownership limitation.

“The regulation has taken effect since this January. Credit card issuers and customers have two years to adjust to it. By 2015, it will have to be fully implemented,” AKKI general manager Steve Marta said.

Based on the regulation, issued by BI in June 2012, people whose monthly income is between Rp 3 million (US$310.56) and Rp 10 million are only allowed to have a maximum of two credit cards.

“As a result, credit card issuers will face tough competition among themselves to prevent customers from closing their own existing card accounts. At the same time, they have to compete to be the one chosen by new customers,” he said.

As of December 2012, there were around 7.8 million credit card holders, 15.7 million credit cards and 19 credit card issuers in Indonesia. Regular accounts made up for about 70 percent of the total number of cards, while premium accounts contributed 30 percent, according to AKKI data. The top five credit card issuers were BCA, Bank Mandiri, BNI, Citibank and CIMB Niaga.

Competition will also be heightened by the return of Citibank Indonesia to the credit card market. The return is scheduled to take place in the second quarter of 2013. Citibank was banned from issuing new credit cards for two years following the death of one of its credit card customers.

Citibank country corporate affairs director Agung Laksamana said his company was developing new programs to be launched immediately after the ban period was complete. Its current number of credit cards stands at 1.5 million.

Meanwhile, BCA senior credit card general manager Santoso said that the bank was not too worried about Citibank’s return, adding that the latter would need some time to settle. “Some of our customers have the same characteristics as those of Citibank. There will be competition among us and each one of us will play the best game,” he said.

BCA ended 2012 with almost 2.4 million credit cards and 1.1 million credit card holders. This year, it expects both figures to climb by between 8 and 10 percent. To reach the target, BCA will strengthen its focus on three segments — high end, lifestyle and family — and turn to its existing banking customers, which number about 12 million in total.

However, according to Santoso, there might be a decline in the bank’s profits from the credit card business as an outcome of another BI regulation. Last month, BI said that it might revoke the licenses of credit card issuers that charge interest rates above the new threshold set by the central bank.

BI capped credit card interest rates at 2.95 percent starting in January to protect local customers from high interest rates. It will reevaluate the new rates at least once every six months as it monitors efficiency in the nation’s banking industry.

BCA’s interest rates stood at 3.25 percent last year. According to Santoso, its new rates now stand at 2.95 percent for Visa and MasterCard, and 2.75 percent for the BCA card private label.

BNI credit card general manager Dodit Wiweko Probojakti said that his bank aimed to generate Rp 23 trillion in credit card transactions in 2013, up 28.5 percent from a year earlier.