The House of Representatives’ Commission XI, which oversees Indonesia’s financial and banking sector, plans to propose a new banking bill that would cap foreign ownership in the country’s banks at below 50 percent and that could spark a wave of banking divestment over the next decade.
Current banking laws allow foreigners to own up to 99 percent in any bank in the country. However, a 2012 central bank regulation imposes strict requirements that effectively limit most new foreign ownership to 40 percent.
Legislators in the House’s previous session, which ran from 2009-2014, proposed a bill last year that would have capped foreign ownership in Indonesian banks at 40 percent and going further even than the central bank’s regulation would have required current foreign owners that exceed the 40 percent cap to divest their shares within 10 years. The bill expired along with the House’s session last October.
Still, legislators hope to revive the bill in the House’s current session. “We aim to finish the [banking bill] this year,” said Gus Irawan Pasaribu, the commission deputy chairman on Monday.
“The point is we do not want foreigners become the majority, so it is possible for foreign ownership to be under 50 percent,” Gus said. “We will also give transition time, because some of the foreigners now own up to 90 percent in [domestic] banks.”
Source: Jakarta Globe, 10 February 2015