The Jakarta Post
State-owned lender PT Bank Negara Indonesia (BNI) hopes to secure approval from the financial regulators of South Korea and Myanmar this year to expand its international business in the countries.
BNI has proposed a 'full branch' in South Korea while in Myanmar it plans to open a 'representative office', although the Southeast Asian country requires foreign banks to establish local subsidiaries to operate there, according to the bank's top executive.
'We hope to obtain permission from the financial regulators of South Korea and Myanmar this year,' BNI president director Gatot M. Suwondo said.
BNI is expanding its reach to the overseas market as it also eyes opening full branches in Malaysia and Singapore, as well as a branch in Jeddah, Saudi Arabia.
The bank's international presence currently spreads from London, New York, Singapore and Tokyo to Hong Kong.
'We acknowledge that it is hard to open overseas branches, because oftentimes they do not produce high revenue in the first one or two years due to a period of development. That is why we want to start small to know fully about the local market,' Gatot said.
South Korea is considered important because its investments in Indonesia are among the top 10 largest in the country and trade activities between the two countries amounted to over US$20 billion in 2013, hence increasing the potential for clientele.
'We will try to bridge investors and customers as well as other kinds of businesses, such as remittance from Indonesian migrant workers in South Korea,' Gatot said.
BNI has had a remittance business in South Korea for four years with a main service for Indonesian migrant workers, BNI senior vice president and head of international banking Abdullah Firman Wibowo said.
In the future, the bank aims to provide trade finance services for Indonesian companies that have business connections with their South Korean counterparts.
'We will start our South Korean future branch with a minimalist office, but we can also establish a Korean desk in Jakarta if needed to support the overseas office, just like our Japan desk over the last two years,' he said.
Firman said BNI would allocate a certain amount of funds as the minimum paid-up capital required by South Korea's banking regulator, even though the value would depend on the amount of business of its future office there. 'As a comparison, each overseas office of BNI has an average capital of around $50 million,' he said.
BNI has obtained approval from Indonesia's financial regulator, the Financial Services Authority (OJK), for its expansion plan in South Korea and has submitted plans to the East Asian financial regulator.
Meanwhile, Gatot said the bank had submitted its proposal to open a representative office in Myanmar to the country's financial regulator more than a year ago. However, the process takes a long time due to Myanmar's internal settlement of various administrative regulations post-military junta.
'We do not know yet about Myanmar's capital requirement to open a subsidiary there, because its parliament has yet to complete various new laws. Myanmar's financial regulator is also in the process of translating our legal documents,' he added.
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