Credit disbursement in Indonesia's banking sector grew at its slowest pace in six years in the first quarter of 2016. This weak performance is attributed to the slowdown in the country's real sector. Muliaman D. Hadad, Chairman of Indonesia's Financial Services Authority (OJK), said credit expansion grew 10 percent (y/y) to IDR 4,084 billion (approx. USD $300 billion) in Q1-2016. However, Hadad remains optimistic that credit expansion will accelerate in the second half of the year in line with forecasts for accelerating GDP growth. This will be a better context for businesses to expand.

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Contrary to earlier information, Indonesia's Financial Services Authority (OJK) is expected to somewhat limit investment opportunities for foreign investors in the country's banking sector. Nelson Tampubolon, Commissioner for Banking Supervision at the OJK, said foreigners will only be allowed to acquire a majority-stake in small Indonesian banks (categorized under the BUKU 1 system) provided that the foreigner purchases two (small) banks and merge these into one entity.

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Indonesia's Financial Services Authority (OJK), the central government's agency that regulates and supervises Indonesia's financial services sector, needs to hire hundreds of new staff in order to safeguard monitoring of the nation's banking sector and to enhance its early warning system in order to detect possible corruption cases. As up to 350 OJK workers are expected to return to the central bank per 1 January 2017, good monitoring of the banking sector is in jeopardy.

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