Indonesia’s financial regulator, Financial Services Authority (OJK), is planning bilateral agreements with Cambodia and five other countries to pave the way for its banks to expand their presence in Asia, OJK chairman Muliaman Hadad told Indonesian media on Wednesday.
This is the first time that Indonesia is looking into Cambodia’s financial industry for opportunities for its banks.
The five other countries are Singapore, Australia, Myanmar, Vietnam and India.
Mr. Hadad said the agreements are expected to be signed this year and next year.
“This year we hope we can sign a definitive agreement with Malaysia, Timor Leste and perhaps Singapore [this year],” he was quoted as saying. He said the other agreements would be signed early next year.
Indonesia is pushing the integration of banking in the region to prepare for the ASEAN Economic Community (AEC), which begins at the end of this year. Bank Indonesia has approved the ASEAN Banking Integration Framework (ABIF) guidelines. These are a reference point for ASEAN’s 10 members to support the AEC through banking integration.
Mr. Hadad has told the Jakarta Post that Indonesia needs to sign the agreement with Myanmar because state-owned lender PT Bank Negara Indonesia Tbk has a license to begin operating there.
The implementation of ABIF is intended to allow the banking sector and businesses to expand efficiently throughout ASEAN in a way that will be stable.
Last June, the National Bank of Cambodia also signed a cooperation agreement with the Japan Financial Service Agency to share experience and expertise in supervising the banking and financial sector.
According to the National Bank of Cambodia, as of December last year Cambodia had more than 30 commercial bank, 11 specialized bank and six foreign bank representative offices as well as almost 40 registered micro-finance institutions.
Credit and deposit growth has been rising at 30 percent per year, while the number of people with access to financial services doubled from 19 percent to 42 percent in 2014, according to the Central Bank.