- VIVAnews/Anhar Rizki Affandi
VIVAnews – The government may use reciprocal treatment for foreign ownership in Indonesia as the most valid reason to apply the restriction.
“From the way I see this, we can’t go back to 1997’s, where Indonesia was considered as Asia’s Tiger. We were great. But all of a sudden, we fell,” said Chief Country Officer of City Indonesia, Tigor M. Siahaan, on Wednesday, Dec 7.
Tigor said Indonesia must be prudent in implementing foreign ownership restrictions. Bank Indonesia must be able to provide answers to crucial questions before implementing the policy.
The question is whether Indonesia’s banking sector would become solid if foreign investments are cramped. The second question is whether or not foreign ownership restrictions will improve banking regulations.
When looking back at the history of foreign ownership in the national banking sector, Tigor revealed that the involvement of foreign investors started when Indonesia was dealing with monetary crisis which had caused Indonesia’s banking sector collapsed.
In 1998, hundreds of banks were founded. However, due to moral hazard and poor management, this helped crunch the economy.
“After the Indonesian Bank Restructuring Agency (BPPN) cleaned up those banks, almost 99 percent were bought by foreign investors,” Tigor said.
After 10 years, Tigor stated that foreign ownership in local bank has made the banking industry more professional, with good corporate governance, as well as better services. It has strengthened the nation’s banking sector.
