By NG MiN SHEN
PT BANK Mandiri (Persero) Tbk will be the first Indonesian bank to operate in Malaysia as a qualified Asean bank (QAB) under the Asean Banking Integration Framework (ABIF).
Bank Negara Malaysia (BNM) governor Datuk Seri Muhammad Ibrahim said integration is the key to progress for Asean, with the successful implementation of ABIF, a major catalyst for sustainable, inclusive and mutually reinforcing growth in the region.
“Financial integration is a key agenda for the Asean region and will only intensify further in the future. As Bank Mandiri is the largest bank in Indonesia, it can bring much experience and leadership across the region,” he said at a luncheon hosted by Bank Mandiri in Kuala Lumpur yesterday.
“I am confident that Bank Mandiri will be the first QAB in Malaysia, a major milestone for financial integration in the Asean region,” he said in a speech distributed to the media.
Bank Mandiri’s current activities cover trade financing, small and medium enterprises and micro- banking products, which Muhammad said are highly relevant towards advancing the interests of both Malaysia and Asean at large.
The entry of Bank Mandiri into the country via ABIF would also provide an opportunity to further enhance the regional integration in payment systems between Malaysia and Indonesia, Muhammad said.
The current collaboration between the automated teller machine (ATM) switches in Malaysia (MEPS [Malaysian Electronic Payment System]) and Indonesia (ATM Bersama) to facilitate cross-border cash withdrawals can be enhanced to facilitate cross-border remittances and also be extended to facilitate retail payment card transactions.
“Eventually, I envision ATMs in Malaysia and Indonesia will be linked seamlessly, thus reducing cost, enhancing safety and expanding outreach,” Muhammad said.
Bank Mandiri, which presently offers remittance services in Malaysia, had expressed its intentions to operate fully in the country. This came after Malaysia and Indonesia inked an agreement in August last year which paved the way for three banking groups from both nations to operate in the other’s country under the same treatment accorded to local lenders.
If granted the licence from BNM, Bank Mandiri would become the first fully-fledged Indonesian lender in the country. Bank Rakyat Indonesia is also said to be considering establishing a presence in Malaysia.
“The potential of Bank Mandiri as a QAB in Malaysia will be a significant milestone for both our countries and Asean. It represents the realisation of
a vision that was formed over six years ago with the ABIF. We should expect greater achievements by both our countries,” Muhammad said.
Meanwhile, according to Bernama, Bank Mandiri president director and CEO Kartika Wirjoatmodjo said the lender is expected to start its operations in Malaysia by year-end.
He said the commencement of banking operations would depend on an audit conducted by BNM over the next few months.
ABIF was endorsed in December 2014 with the vision of eventually allowing QABs to operate freely in the region. Under the framework, banks will be able to play a greater role in facilitating cross-border trade and investment.
The framework will further enhance linkages and allow for deeper integration and provide adequate safeguards to account for national development objectives and financial stability.
Muhammad said the ratification of ABIF commitments, completed in March this year, showed Malaysia’s commitment towards the agenda.
“I hope that the ratification process can be concluded swiftly to enable Indonesian QABs to operate in Malaysia in the near future,” he said.
Muhammad said Malaysian companies had invested a total of US$12.1 billion (RM52.02 billion) in Indonesia as at the end of the first-quarter of 2017, with the investments spanning the financial services, telecommunication and agriculture sectors.
“Over the last few years, Indonesian firms have also started to increase their presence in Malaysia. Last month our respective trade ministers announced a bilateral trade target of US$30 billion in the coming years, double of US$13.8 billion recorded in 2016.
“I strongly believe this target is very much achievable and with the closer banking relationship our trade will further flourish,” Muhammad said.