Push to limit foreign ownership in banks

JAKARTA: Indonesian MPs said they want a new banking law, under
discussion since late last year, to limit foreign ownership to a maximum
of 50% to 51% and suggested it could make it to the statute books by
next year.
MPs have not publicly discussed a percentage figure
before. The comments by two senior parliamentarians come as debate rages
over whether Singapore's DBS Group Holdings Ltd
can press on with its year-old bid to buy Bank Danamon Indonesia Tbk
PT, after the central bank gave it approval to take an initial 40%
stake.
“I hope the new banking law will be discussed in the plenary session in July so it could become law next year,” said Harry Azhar Azis, vice-chairman of parliament's powerful Commission XI, which oversees the financial and banking sector.
The
law has been debated in earnest by the commission since late last year
in the wake of the proposed DBS-Danamon bid. A draft is being worked on
and needs to be presented to the full parliament, then signed into law
by the president. The proposed law is unusual in that it is relatively
rare for parliament to initiate legislation but illustrates an
increasingly nationalist sentiment among MPs.
“So far, we haven't
discussed the ownership percentage cap. But if we follow global
standards it could be either 49% or 51%. We definitely can't give 99%
anymore,” Azis said.
The new law would replace one brought in
after the 1998 Asian financial crisis when many banks collapsed and
which allowed foreign investors to buy up to 99% in a bank. Azis, who is
a member of the second biggest political party Golkar, said the
parliament was still discussing the details with the new banking
regulator OJK which took on its role from next year.
Dolfi OFP, a
senior lawmaker with leading opposition party PDIP, wanted tougher
constraints. “We want foreigners to own below a 50% stake. It's good
enough for them.”
Indonesia's central bank gave its approval for
DBS Group to buy a 40% stake in Bank Danamon, opening the door for
Singapore bank to complete South-East Asia's largest bank merger, if it
is allowed to buy up the whole bank as is wishes. However, even under
current rules it will have to wait at least 18 months to become a
majority owner because it has to first go through three
financial-soundness tests at six-month intervals. - Reuters