Golkar keen to curb banks' foreign ownership

JAKARTA • Indonesia's Golkar party wants to curb foreign ownership of local banks, including forcing non-Indonesian investors to divest existing shares if their ownership should exceed the limit being proposed in a new Bill.

Mr M. Misbakhun, a Golkar lawmaker on Commission XI at the House of Representatives, which oversees Indonesia's banking and finance sectors, said in a statement that such a move would reduce risks in the sector.

It would also boost the involvement of local investors, The Jakarta Globe newspaper quoted him as saying on Friday.

The renewed push to curb foreign shareholding in the financial sector by Golkar, Indonesia's biggest opposition party, comes at a time of rising nationalist sentiments in other areas, including the fishing to mining industries.

Under the 1998 banking law currently in force, foreign entities are allowed to own up to 99 per cent of Indonesian banks, but a 2012 central bank regulation imposes strict requirements for those owning a stake above 40 per cent, the newspaper said.

The imposition of the 40 per cent limit caused DBS Group Holdings to abandon its US$6.5 billion (S$9 billion) bid for PT Bank Danamon Indonesia two years ago.

Mr Misbakhun said that under a Bill being drafted, both foreign and local investors can own a maximum 20 per cent stake in an Indonesian lender.

The draft also proposes to limit the combined market share of all foreign-controlled banks and the local branches of foreign lenders operating in Indonesia to a maximum of 30 per cent of total assets of the nation's banking sector, he added in the statement.

Indonesia has 118 commercial lenders, including several foreign-owned banks.

The Bill will need to be discussed in Parliament and will also need government input before it can be put to a vote.

A version of this article appeared in the print edition of The Sunday Times on October 11, 2015, with the headline 'Golkar keen to curb banks' foreign ownership'. Subscribe