Banking Sector in Indonesia Remains a Magnet for FDI


Dian Ediana Rae, the Banking Supervisory Executive Head at the Financial Services Authority (OJK), asserts that the banking sector in Indonesia remains highly attractive to foreign investors. Despite facing a dynamic and competitive environment, the sector continues to draw interest from overseas, notably from Korea and Japan. He emphasised that stable economic growth, a sizable population, and abundant opportunities for innovation and expansion, particularly in digital banking, fintech, and financial inclusion, are key factors driving investor interest.

The OJK observes a consistent influx of licence applications from foreign entities seeking to bolster banking capital through rights issues and other avenues. A stringent evaluation process ensures that foreign investments positively contribute to the banking sector and Indonesia’s broader economy.

Ongoing efforts to refine policies and regulations aim to strike a balance between attracting investment and safeguarding financial system stability and integrity. Measures include setting ownership limits, facilitating technology transfers, and enhancing local capacity.

Korean and Japanese investors, in particular, are increasingly drawn to Indonesia due to its robust economic growth and significant market potential. Partnerships with local banks enable them to leverage local expertise, better understand market dynamics, and mitigate operational risks.

Their direct investments and acquisitions reflect a long-term commitment to fostering the growth and development of Indonesia’s banking sector.

The banking sector’s healthy Net Interest Margin (NIM), ranging between 3-5 percent, coupled with the profitable operations of Korean and Japanese affiliated banks, underscores its resilience. This financial robustness presents fertile ground for portfolio diversification and capitalising on Indonesia’s promising economic outlook.

As the country’s banking landscape evolves, sustained interest and investments from foreign entities highlight its pivotal role in the economic landscape of Indonesia, promising continued growth and innovation in the years ahead.