REPUBLIKA.CO.ID, BOGOR - PT Bank Negara Indonesias chief economist Ryan Kiryanto said on Saturday that foreign banks were eyeing further expansion into Indonesia's banking sector.

"Many public funds have yet to enter banks and many regions in Indonesia still lack banks or have no banks," he said.

He added that foreign banks had sought to enter the local market due to the implementation of the ASEAN Economic Community (MEA) in the financial sector in 2020. Ryan further said the ratio between third party funds and the country's Gross Domestic Product had reached only 37.5 percent, or some 3,500 trillion IDR of the GDP.

Meanwhile, in Singapore the ratio is 147.9 percent, while in Malaysia it is 62.4 percent, Thailand 110.41 percent, the Philippines 46.6 percent and Vietnam 34.7 percent. In terms of credit, Ryan said, the volume of distribution of bank credits in Indonesia had reached only 20.6 percent of the GDP, while in Singapore it was 120.6 percent, Malaysia 117 percent and Thailand 85 percent.

He added that banking markets in Singapore, Thailand and Malaysia had already been saturated and therefore they turned to Indonesia.

"So, Indonesian banks had better focus on the domestic market and make foreign expansion their second choice," he said.

He noted that national banks needed to secure their own market segments that had not yet been fully exploited.

"It must not happen that while they are seeking to penetrate foreign markets that have been saturated, their own markets are being exploited by foreign banks," he said.

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