Hogarth: Indonesia ownership limits shouldn’t hit foreign banks

Author: | Published: 11 Aug 2011

Foreign banks should argue for exemption from Indonesia’s central bank plans to limit local bank ownership according to lawyers in the country.

Bank Indonesia last week announced plans to cut the stake an individual investor can hold in commercial banks from 99% to 50%. The move aims to improve corporate governance and strengthen control of local banks. It should also empower state-owned banks, which are expected to be exempt from the rulings.

But in forcing majority shareholders, whether local or foreign, to sell-down their holdings, the rules could harm both foreign investment into the country and development of Indonesia’s banking sector.

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