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Indonesian Islamic Banks Easily Enters Malaysia
Tuesday, July 19, 2011 | Admin

JAKARTA (IFT) - Bank Negara Malaysia (Malaysian Central Bank) allows foreign conventional banks to expand to Malaysia only in suburban areas or villages. Bank Negara Malaysia provides a wider opportunity for foreign Islamic banks to open branch offices anywhere.

Zeti Akhtar Aziz, Governor of Bank Negara Malaysia, said that the institution must take an assertive decision to foreign banks expanding to the country because many foreign financial institutions from developing countries only open branch offices in urban areas. Only urban citizens, therefore, have access to banks.

Bank Negara Malaysia has given leeway to increase the number of branch offices that may be opened by foreign banks from four branch offices to eight branch offices. As for Islamic banks, the institution does not limit the quantity of branch offices.

Not Equal

Darmin Nasution, Governor of Bank Indonesia refuses to comment further on the matter. He previously said that there should be reciprocity between Indonesian banks and other countries. It is more difficult for Indonesian banks to open branch offices abroad than for foreign banks to open branch offices here in Indonesia.

Sigit Pramono, Chairperson of National Banks Association, said that the policy of Bank Negara Malaysia does not equate to the principle of reciprocity.

Since foreign banks can open branch offices in several big cities in Indonesia, Malaysian Central Bank should issue the same policy to give access for Indonesian banks to open branch offices in their big cities.

“At the moment, it is not bad in this early stage to equalize” he said. Sigit hopes that Bank Negara Malaysia can open up access for foreign banks in the future. If not, Bank Indonesia can apply the reciprocal basis to close some access for foreign banks.

Gatot M Suwondo, Chairperson of State-Owned Banks (Himbara) and President Director of PT BNI Tbk (BBNI) questioned the policy.

He wishes that the principle is upheld. He hopes that Bank Indonesia and House of Representatives can establish a reciprocal regulation.

Rizqullah, President Director of Bank BNI Syariah, a subsidiary of PT BNI Tbk, said that a wider access for Islamic banks will not attract BNI Syariah to open a branch office there.

Domestic potential development for Islamic banks is still large because there is no national Islamic bank whose assets have reached 5 percent when compared with the banking industry’s assets. As of May 2011, Islamic banks’ assets reached Rp 104.33 trillion or 3.33 percent compared to assets of conventional banks at Rp 3,136.41 trillion.

 

Source: Myrna & Arthur – Indonesiafinancetoday.com

 

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