The Financial Services Authority (OJK) will ease a strict policy imposed on foreigners wishing to open dollar savings accounts in local banks as part of the agency's efforts to further improve foreign exchange (forex) liquidity in the country.
OJK chairman Muliaman D. Hadad said the financial regulator was currently revising the existing rule, which requires foreign individuals to provide numerous administrative documents when opening a forex savings or time deposit account at a local bank.
The revision is expected to help stabilize the rupiah, which often faces volatility when there is high demand for US dollars due to limited sources of the currency. "We will issue the revised regulation soon and it will provide a simple procedure for foreigners when opening a bank account in Indonesia. We hope it will help mobilize more forex resources in banks," Muliaman said on Tuesday.
Muliaman said a day earlier that the revised rule would allow an expatriate or tourist to provide only a copy of their passport to open a dollar savings or deposit account with a maximum value of US$50,000.
For savings or deposit accounts with a value above $50,000, Muliaman said banks would require foreigners to submit an extra document, which could be in a form of a reference letter from a bank in their home country, or a copy of their residential contract while living in Indonesia.
Muliaman said the OJK was adjusting the policy according to international rules, adding that some neighboring countries, such as Singapore and Australia, had shown leniency to foreigners who wished to open bank accounts.
According to Muliaman, the revision would help create a larger pool of forex supply, especially from tourists, as 20 percent of between 10 million and 12 million people who travel to the country are frequent visitors for business purposes such as attending conferences.
"Twenty percent means there is an average of 2.4 million tourists who visit Indonesia frequently. If we assume each of them deposits between $1,000 and $10,000, there would be a potential amount of around $240 million to $24 billion to be raised each year," Muliaman said.
Bankers had mixed reactions when asked to comment on the planned policy. Budi Gunadi Sadikin, president director of state-owned Bank Mandiri, said the OJK's plan would have positive effects as there would be more foreigners opening accounts with local banks.
Budi said higher amounts of forex deposit accounts in local banks would support the lenders to have ample forex liquidity in the domestic market and help press down the need for overseas loans, which often creates pressure on the rupiah.
A larger pool of forex supply in local banks would also be beneficial to support financing of more infrastructure developments in the country, according to Budi. "Indonesia hosts many expatriates who work in various sectors with high incomes in US dollars and they need local banking services, which are still quite restrictive for them," Budi said.
On the other hand, OCBC NISP president director Parwati Surjaudaja said a more relaxed rule on foreigner deposit accounts would not necessarily increase the amount of forex third-party funding (DPK) in local banks as there were other influential factors, such as the exchange rate and supply-demand conditions in the forex market.
"Giving leniency in forex accounts is one thing, but it will all go back to the level of confidence toward the rupiah and Indonesia that should be maintained," Parwati told The Jakarta Post.