BI unconcerned about foreign banks` entry inti micro sector

Jakarta (ANTARA News) - Bank Indonesia (BI) Deputy Governor Mulyanaman D Hadad said the central bank was not concerned about the entry of foreign banks into the micro and small business sector in Indonesia.

"I don`t think we have to be concerned. I think it is the duty of all of us to improve the competitiveness of local banks," he said in response to a question on the entry of foreign banks into the small business sector in Indonesia.

He said the foreign banks` entry into the micro business sector would have a positive impact because it would enable small people to gain access to financing sources.

"There is a positive aspect to it because we still do not know when small people can have access to financing sources if we wait for domestic banks to help them out," he added.

He said that now only about 40 percent of the people had access to banks.

Hadad said that the entry into micro businesses of foreign banks was expected to bring not only capital money to them but also knowledge and managerial skills so that it would be beneficial for the development of banks in this sector.

He said that actually almost half of banking credits were provided for the micro, small and medium-sized businesses (UMKM).

Banks which provided credits for the UMKM sector were state-owned such as BRI which had units in rural areas.

BRI has a composition of credit provision where 80 percent went to the UMKM sector.

The BRI step has been followed by Bank Danamon, whose controlling shares are owned by Singapore`s Themasek Holdings through Asia Financial (Indonesia) Pte Lite.

Danamon built Danamon saving units in various rural areas which are intended to provide financial access for micro and small businesses.