Jakarta. Bank Mandiri, Indonesia's largest lender, is set establish a fully licensed bank in Malaysia by the end of this year, concluding a struggle for equal treatment in doing banking in the neighboring country.
Two months ago, the lender secured the Qualified Asean Bank license, which allows it to operate in several Southeast Asian countries under the region's banking cooperation framework.
Mandiri president director Kartika Wirjoatmodjo presented the plan to establish Bank Mandiri Berhad to Bank Negara Malaysia governor Muhammad Ibrahim and the chairman of the board of commissioners of Indonesia's Financial Services Authority (OJK), Muliaman D. Hadad, in Kuala Lumpur on Thursday (06/07).
"As a QAB-licensed bank, we will operate in Kuala Lumpur to support [our] business activities," said Kartika, adding that many Indonesian businesses are expanding their operations to other Asean countries.
Bank Mandiri is committed to set aside 300 million ringgit ($69.81 million) for its Malaysian operations.
"We've started with a capital injection of 50 million ringgit and it will be increased gradually," said Kartika. In the beginning, Bank Mandiri will open two offices serving wholesale and retail businesses.
Mandiri already has seven overseas offices — in Cayman Islands, Timor Leste, Hong Kong, Shanghai and Singapore. The lender has also been operating a remittance service subsidiary in Malaysia since 2009.
Also since then, Mandiri has been spearheading efforts for a reciprocal treatment of Indonesian banks seeking to establish businesses in Malaysia.
While Indonesian authorities practically apply a blank check approach to Malaysian lenders operating here, Indonesian lenders face various limitations in Malaysia, ranging from capital restrictions to caps on the number of ATMs they can run.
In 2015, the banking authorities of Southeast Asia agreed to integrate the region's banking system, also by allowing some of its best banks to get full access to all Asean markets.
"We appreciate the decision of the Malaysian banking authority to support the presence of Indonesian banks, as Indonesia has been treating Malaysian lenders equally. This is a step forward, which can strengthen relations between Indonesia and Malaysia," Mulaiman said in a statement.
"It shows that we can advance with [our] Asean prospects," he added.