Banking
From The Report: Indonesia 2019
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Twenty years on from a severe financial crisis the effects of which still define the industry, the banking sector in Indonesia is crowded but rich in opportunity. A diverse array of banks and non-bank financial institutions vie for existing customers and work to attract new ones, in what remains a lightly penetrated market. With the world’s fourth-largest population, Indonesia is seen as having great potential, and continues to attract foreign investment. Market strategies, however, are in a state of flux. A handful of major lenders, some of them state-owned, have built national branch networks and constitute formidable competition for any lender following a nationwide universal banking model. Lenders are increasingly looking at financial technologies, in particular those that reach consumers via their mobile phones, as a way to scale up without investing time and money building a physical presence. This chapter also contains interviews with Kartika Wirjoatmodjo, President Director and CEO, Bank Mandiri; Achmad Baiquni, President Director, Bank Negara Indonesia; and Batara Sianturi, CEO, Citi Indonesia, and Chairperson, International Banks Association of Indonesia.

Articles from this Chapter

Overview

New focus: Once concerned with fast-paced growth, stakeholders now seek to strengthen fundamentals and shore up investment
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Twenty years on from a severe financial crisis that still shapes the industry, the banking sector in Indonesia is crowded but rich in opportunity. A diverse array of banks and non-bank financial institutions (NBFIs) vie for existing customers and work to attract new ones, in what still remains a lightly penetrated market. With the world’s fourth-largest population, Indonesia is seen as having great potential, and continues to attract foreign investment. Market strategies, however, are…

Interview

Platform for success: Kartika Wirjoatmodjo, President Director and CEO, Bank Mandiri, on improving business set-up and payment methods
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Interview:Kartika Wirjoatmodjo What is needed to subdue economic headwinds? KARTIKA WIRJOATMODJO: Indonesia faces two key economic challenges: its dependency on imports and slow export growth. The Indonesian market is vast and industrial manufacturers see healthy demand; however, they are faced with operational hurdles related to acquiring land and obtaining permits. To combat this, the government introduced special economic zones, fiscal incentives for specific industries and established…

Analysis

Fresh finance: Investment funds, global banks and bond issuances further infrastructure development goals
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The country’s infrastructure deficit has been identified as an opportunity to further economic growth. To this end, there are 223 separate infrastructure projects in the pipeline expected to cost $307bn, including new roads, ports, airports, power plants and health care facilities. To date, state-owned enterprises (SOEs), such as local construction firm Waskita Karya and utilities provider Perusahaan Listrik Negara, have taken the lead; however, the capital bases of SOEs has diminished…

Interview

Growth potential: Achmad Baiquni, President Director, Bank Negara Indonesia (BNI), on opportunities for local banks to expand and enter new and underserved markets
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Interview: Achmad Baiquni How do you evaluate the performance of Indonesia’s banking sector in 2018? ACHMAD BAIQUNI: Compared to other ASEAN markets, Indonesia is able to maintain double-digit growth, between 12-14%, in terms of lending. In fact, among the G20 nations, Indonesia is third only to China and India in terms of GDP growth. In view of the ongoing US-China trade dispute and the tightening of the US Federal Reserve, the Indonesian government is trying to minimise the impact of such external…

Interview

Attractive destination: Batara Sianturi, CEO, Citi Indonesia; and Chairperson, International Banks Association of Indonesia, on embracing technological change and increasing competitiveness
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Interview:Batara Sianturi As financial technology (fintech) has penetrated underserved markets, to what extent can it be regarded a disruption to the banking sector? BATARA SIANTURI: We are seeing fintech develop through partnerships. This is the age of collaboration, with banks and fintech mutually dependent on one another. GOJEK, Traveloka, Tokopedia and Bukalapak are Indonesia’s four so-called unicorns, being start-up companies valued at over $1bn. As start-ups are established, fintech,…

Analysis

Growth driver: Sharia-compliant financial products gain traction
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As the most populous Muslim country in the word, Indonesia is developing itself as a centre for sharia-compliant banking, seeking to turn this speciality from a niche activity to a major sector growth driver. The authorities have applied new laws and regulations for Islamic finance they hope will boost the penetration rate beyond the current levels. The government is looking to triple the segment’s current market share to 15% of sector assets. The country has 13 commercial Islamic banks,…

Analysis

Bloc work: Regulators work to establish a single ASEAN financial market
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While the ASEAN Economic Community (AEC) was formally established in 2015, financial cooperation across the region remains somewhat fragmented. Goods and services move freely between countries, but banks, stock exchanges and securities companies tend to be limited to their home markets. Since the 1997-98 Asian financial crisis, ASEAN has remained focused on integrating regional financial markets. This issue is key to the AEC Blueprint 2025, ASEAN’s long-term development plan that seeks…

Analysis

Bloc work: Regulators work to establish a single ASEAN financial market
OBG
plus

While the ASEAN Economic Community (AEC) was formally established in 2015, financial cooperation across the region remains somewhat fragmented. Goods and services move freely between countries, but banks, stock exchanges and securities companies tend to be limited to their home markets. Since the 1997-98 Asian financial crisis, ASEAN has remained focused on integrating regional financial markets. This issue is key to the AEC Blueprint 2025, ASEAN’s long-term development plan that seeks…