Banking authorities of Indonesia and Malaysia have signed an agreement to make banking operations easier for their respective banks. Indonesia’s Financial Services Authority (OJK) and Bank Negara Malaysia (BNM), Malaysia’s central bank, signed a bilateral agreement enabling both countries to establish banking subsidiaries with domestic privileges. Indonesia president Joko ‘Jokowi’ Widodo and Malaysian prime minister Najib Abdul Razak were present at the function held in Kuala Lumpur. The banking agreement is the first of its kind among ASEAN countries. Indonesian banks have had a difficult time penetrating Malaysia’s market due to the latter’s strict regulations regarding foreign banks. The new agreement will allow Indonesian banks to enjoy similar domestic privileges already cherished by their Malaysian counterparts. However, Indonesian banks will still be required to meet capital requirements of 300 million ringgits, but negotiations are possible if they cannot fulfill the requirement within five years.
