Monday, January 16, 2006

Blaming foreigners

The Central Bank, Bank Indonesia, is going to limit the employment of expatriates at middle management levels by banks except in posts still unable to be filled by Indonesians.
The reason?
"Among the economic problems we are now facing and have to overcome in the coming years is unemployment which is now reaching 12 million people. In this case, I appeal to banks controlled by foreign investors to help overcome the problem," argued Burhanuddin Abdullah, the central bank governor on Friday.
Well, if we take a serious look at the number of expatriates in the banking sector, it is increased, but I'm afraid that has nothing to do with the massive layoffs in the real sector which was the main cause of high unemployment rate in Indonesia.
The Central Bank Regulation No. 7/25/PBI/2005 issued in August 3, 2005 is one of the measures taken to 'protect' the banking industry from influx of foreign bankers. Under the regulation, foreign bankers should pass the risk management certification test conducted by Risk Management Certification Body (BSMR).
BSMR Chairwoman Gayatri Rawit Anggreni, a director of state-owned PT Bank Rakyat Indonesia Tbk, admitted the test is one of the weapons to protect local bankers from increasing number of foreign bankers work in Indonesia.
The first test was conducted in December 2005 on 1.700 bankers with the result of almost 1.060 passed the test, others failed including some foreign bankers.
The Central Bank opened up doors for foreign bankers through its regulation in 1998 that allow public banks whose shares are partially owned by foreign parties to place foreign bankers as members of the board of directors and the board of commissioners with the requirement that a minimum of one member of the board of commissioners and directors is an Indonesian citizen.
The Central Bank also accused banks controlled by foreign investors are being slow in chanelling loans while they hold 48.51% of the total assets in the national banking industry compared to the state-owned banks at 37.45%.
Out of the country's 131 banks, 41 are controlled by foreign investors in branches of foreign banks, joint venture banks, and foreign-dominated national private banks.



Blogger javaricho said...

It will be interesting to see how this will add to the flow of credit to companies in the real sector in Indonesia. After all the levels of bad debts inmandiri and BNI would suggest that not all is well there either!

January 16, 2006 11:12 AM  

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