OJK: Indonesia's Banking Investment Climate Attracts Foreign Investors

Chief Executive of Banking Supervision of the Financial Services Authority (OJK) Dian Ediana Rae. (Photo: Doc. Antara)

JAKARTA - Chief Executive of Banking Supervision of the Financial Services Authority (OJK) Dian Ediana Rae said the investment climate in the banking sector in Indonesia remains attractive to foreign investors. "In general, the investment climate for foreign investors in the banking sector of Indonesia remains attractive despite its competitive dynamics and competition," said Dian in Jakarta, quoted from Antara, Thursday 22 February. Factors such as stable economic growth, large population numbers, and innovation opportunities as well as expansion, including in the digital banking sector, financial technology (fintech), and financial inclusion, remain attractive to foreign investors. OJK periodically receives various application for permission from foreign investors, including those who wish to strengthen bank capital through rights issue. Strict evaluation is carried out to ensure positive contributions of foreign investors to the banking sector and the Indonesian economy as a whole. Policies and regulations continue to be refined to maintain balance between inviting investment and ensuring stability as well as financial system integrity, including rules on ownership restrictions, technology transfer, and strengthening local capacity. Furthermore, Dian said Korean and Japanese investors still show interest in the Indonesian banking sector. Their views are reflected in strategic steps that have been taken.

Solid economic growth and large market potential in Indonesia are the main triggers for investment.

Investors tend to see opportunities in portfolio diversification and seek profit from promising economic conditions.

This is reflected in the range of Indonesia's national banking Net Interest Margin (NIM) which is still in the range of 3-5 percent, as well as the majority of banks affiliated with Korea and Japan still posting fairly good profits. Korean and Japanese investors are involved in various aspects of banking business, including strategic partnerships with local banks, direct investments, and even acquisitions. Partnerships with local banks help them take advantage of local knowledge, understand market needs better, and minimize operational risks. Live investment and acquisition reflects their long-term commitment to growth and development of the Indonesian banking sector.