State lender Bank Negara Indonesia (BNI) is due to open its first-ever representative office in Myanmar in November to facilitate the expansion of fellow state-owned enterprises (SOEs) in the neighboring country.
According to the deputy general manager of BNI’s international division, Rahmad Hidayat, the bank will submit a proposal to Myanmar’s central bank next week.
“We have secured approval from the OJK [Indonesia’s Financial Services Authority], as well as a statement letter from the Myanmar Embassy in Jakarta,” he said on Friday.
BNI’s board of directors had met with officials of Myanmar’s central bank and the latter had in principal approved the plan, he said. “We expect to acquire the official approval soon,” Rahmad added.
The office, which will be located in Yangon, will be jointly operated by BNI and state construction firm Wijaya Karya (WIKA).
As previously reported, WIKA has begun to venture into Myanmar as part of its regional expansion efforts.
The firm recently secured a US$125-million of contract to build a commercial tower in the country. It will commence construction in October and hopes to complete it in two years.
Besides WIKA, international carrier services provider Telekomunikasi Indonesia International (Telin) — part of state telecommunications firm Telekomunikasi Indonesia — and lubricant producer Pertamina Lubricants — subsidiary of state oil and gas company Pertamina — are reportedly joining the line-up of Indonesian state enterprises expanding into Myanmar as well.
Rahmad said the representative office would facilitate any future business transactions that occurred between the state enterprises and local companies, even though actual financial transactions would be recorded at BNI’s Singapore branch.
BNI to submit proposal to Myanmar’s central bank next week Myanmar’s central bank has ‘in principal’ approved BNI’s plan BNI to operate its planned office in Yangon jointly with WIKA “The foreign exchange-denominated transactions will be processed at BNI Singapore, which will then be consolidated into BNI’s operations as a whole,” he added.
BNI also hopes to create partnerships with Indonesian private enterprises that have already established their presence in Myanmar, such as poultry firm Japfa Comfeed and pharmaceutical company Kalbe Farma. Japfa is already listed as one of BNI’s clients in Indonesia.
To better facilitate the transactions, BNI has begun cooperating with local lender Kanbawza Bank and is looking to work with another lender as well, the Co-operative Bank Ltd.
The expansion into Myanmar is expected to boost BNI’s fee-based income from international operations, including from trade, starting from 2015.
Last year, the lender posted $13.71 billion in export-transaction volume and $14.83 billion in imports.
The transactions eventually generated Rp 328.5 billion ($27.77 million) in export revenues and Rp 197.2 billion in import revenues.
Meanwhile, according to Rahmad, BNI is looking to widen its remittance business as well this year by cooperating with South Korea’s Nonghyup Bank. Nonghyup will be the second South Korean lender it has partnered with after Kookmin Bank. BNI’s partnership with Kookmin was signed last year.
“The business model will be similar to what we already have with Kookmin, which is a remittance representative office. Talks are ongoing between BNI and Nonghyup’s representative office in Jakarta,” he said.
Source: The Jakarta Post