State-owned lender Bank Negara Indonesia (BNI) is inching closer to opening overseas operations in Myanmar in this year’s second half.
The bank recently received approval for its Myanmar representative office from the Central Bank of Myanmar, paving the way for BNI to begin operations there in August.
“We will prioritize our consumers, including state-owned enterprises that have already set up shop there or plan to expand there. We will try to facilitate the business of Indonesian companies in Myanmar,” Financial Director Rico Rizal Budidarmo said.
The leased office, located in Yangon, will share space with the office of state-run construction firm PT Wijaya Karya (WIKA). The representative office is expected to facilitate the expansion of fellow state-owned enterprises as well as private enterprise in the neighboring country.
Several state-owned enterprises are ready to expand their businesses into Myanmar. Some of these include WIKA, international carrier services provider Telekomunikasi Indonesia International (Telin), which is a part of state telecommunications firm Telekomunikasi Indonesia (Telkom) and state-owned oil and gas firm Pertamina.
Meanwhile, some Indonesian private companies, such as poultry firm Japfa Comfeed and Indonesia’s largest pharmaceutical company Kalbe Farma, have already established a presence in Myanmar.
The trade value between Indonesia and Myanmar reached US$636.6 million from April 2014 to March 2015, according to data from the Indonesian embassy in the South East Asia country.
The opening of the branch in Myanmar is also expected to boost BNI’s fee-based income from international operations. BNI’s financial report revealed that it generated Rp 72.9 billion in recurring income from trade finance in the first quarter.
The bank is also currently preparing the infrastructure to support its branch in South Korea, a requirement to receive a full license after it previously secured a preliminary license in April.
“We are preparing the building, the IT system, and the organization. The final approval will be given two months after the infrastructure is ready,” said BNI corporate secretary Tribuana Tungga Dewi, adding that the full branch office was slated to be ready on September.
The bank has also prepared an equivalent of $30 million in funds in initial capital for the branch, as required by South Korean regulations.
The expansion received a greenlight after the Financial Services Authority (OJK) inked memorandums of understanding (MoU) with its South Korean counterparts the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) to facilitate the expansion of financial firms in both countries.
BNI expects higher fee-based income from trade finance and remittance activities following the Seoul branch opening.
BNI managed to collect Rp 24.3 billion in fee-based income from its remittance business in the first quarter of this year.
Currently, the bank has an international presence in London, New York, Singapore, Tokyo and Hong Kong.
Source: The Jakarta Post