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Indonesia Opens Opportunities for Foreign Banks

According to Morgan Stanley’s research, the recent merger and acquisition trend shows that Indonesia is opening up more opportunities for foreign banks.

Morgan Stanley stated that this can increase integration and improve efficiency thus encouraging structural establishment.

In the article, “M&A: Higher Foreign Participation to Enhance Capital Base and Efficiency” states: “In the short term, this will reduce the risk of national services for state-owned banks”.

Morgan Stanley states that the Indonesian banking industry has become more active over time with acquisitions worth approximately 7 billion USD in 2019.

Despite the current overall status of the Indonesian economy resulting from the COVID-19 situation, the recent increase of acquisitions that are more accommodating of relaxing capital is also gaining interest from foreign investors.

The current conditions in Indonesia provide incentives for foreign banks to acquire other banks in Indonesia – predominantly Japanese and Korean owned.

Morgan Stanley hopes that a rise in participation from foreign banks will increase efficiency in the banking system by increasing domestic competition.

Additionally, the direction of the regulator’s policies to help small banks will become clearer thanks to the involvement of foreign investors.

In the long-term, increased investment from foreign banks will support digital initiatives, create more competition, and provide employment opportunities.

Source: Medcom.id

Read more: Gojek Supports 120,000 Businesses

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