Bank ownership in Indonesia

Hamud M Balfas is a lawyer with Ali Budiardjo Nugroho Reksodiputro (ABNR) in, Jakarta, Indonesia. He may be contacted at: hbalfas@abnrlaw. com. Hamud writes articles on various subject of the law extensively ( www.abnrlaw.com ). He is also the author of a book on Indonesian Capital Market (Hukum Pasar Modal Indonesia), now in its second edition.

Ownership of banks in Indonesia, especially by foreigners, who in recent years have acquired significant control in the Indonesian banking industry, has become the subject of heated debates among regulators, public and politicians. This is due to the fact that, since the last Asian economic and financial crisis of the late nineties, foreign ownership of the industry has grown steadily and rapidly either in terms of assets that they control or market share of the industry. The problem has also been made worse as there have been trends that certain foreign groups of companies have had control of a number of banks in their hands, and therefore have created an unhealthy concentrated ownership as well as nationalistic sentiments regarding foreign ownership in the country’s economy.