REPUBLIKA.CO.ID, JAKARTA -- Foreign banks began to explore Indonesian market, which had not been explored deeply.

They did it ahead of the implementation of ASEAN Economic Community (AEC) of financial sector in 2020.

According to Chief Economist of Bank Negara Indonesia (BNI), Ryan Kiryanto, many public funds have not yet entered to banking sector and many regions in Indonesia are not yet covered by banking services.

Kiryanto explained that Indonesia's ratio on third party fund (DPK) to gross domestic product (GDP) reached 37.5 percent or about 3,500 trillion IDR of GDP, compared to Singapore (147.9 percent), Malaysia (62.4 percent), Thailand (110.41 percent) and Philippines (46.6 percent).

"In terms of credit, Indonesia's banking loan still reached 20.6 percent of GDP compared to Singapore (120.6 percent), Malaysia (117 percent) and Thailand (85 percent)," Kiryanto said recently.

Banking market in the three countries are already saturated, so they tried to enter Indonesia. To face this challenge, Indonesia's banks are expected to focus on domestic market than expanding business to foreign countries. Bank Indonesia (BI) also asked local banks to merge in order to deal with AEC. The central bank will give incentives to banking merger or consolidation.

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