Update COVID-19 in Indonesia: 1,298,608 confirmed infections, 35,014 deaths (23 February 2021)
23 February 2021 (closed)
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Kasikornbank, the fourth-largest bank in Thailand, expressed its intention to acquire a bank in Indonesia. However, in line with the content of the ASEAN Banking Integration Framework, this plan cannot be carried out rapidly. Meanwhile, Indonesia's Financial Services Authority (OJK), which regulates and supervises the financial services sectors in Indonesia, only allows a foreign investor to acquire a majority-stake in small Indonesian banks (categorized under the BUKU 1 system) provided the foreign investor purchases two (small) banks and merge these into one entity.
However, if the foreign investor only acquires one existing bank in Indonesia, then foreign ownership is limited to a maximum of 40 percent.
Pipit Aneaknithi, General Director at Thailand's Kasikornbank, said it is more difficult to open a branch in Indonesian than it is in Vietnam, another Southeast Asian nation that is on the radar of Kasikornbank.
Mulya E. Siregar, OJK Deputy Commissioner for Bank Supervision, said it is difficult for any Thai bank to open a branch in Indonesia through an acquisition, especially because financial market regulators in both countries need to make an agreement (MoU) first. Besides that, the Bangkok Bank already exists in Indonesia, and before another Thai bank can be established here, there need to be at least two or three Indonesian banks that set up a branch in Thailand first (reciprocity principle). Although Thai financial authorities provide fiscal incentives to foreign banks, there are currently no Indonesian banks that are eager to expand to Thailand as it requires big capital, while competition (from local banks) is tough.