TASK 2 : ARTICLES OF ECONOMICS (HOT NEWS) : DIRECT AND INDIRECT

Name  : Muhammad Fadhilah Abdussalam

NPM    : 14215552

Class    : 1EA07

TASK 2 : ARTICLES OF ECONOMICS (HOT NEWS) : DIRECT AND INDIRECT

Agreement to give Indonesia banks leeway in Malaysia

Posted on May 28, 2016

       

The Financial Services Authority (OJK) will sign an agreement soon with Malaysia,s banking authority, Bank Negara Malaysia (BNM), easing restrictions for Indonesian banks operating there.

       The bilateral deal, expected to be signed in the first quarter of this year, will treat Indonesian banks as equal with Malaysia’s local banks, amid complaints of difficulties operating fully in Malaysia.

       The equal treatment will include ATM installations and payment services fees, said OJK chairman Muliaman D. Hadad, without disclosing further details.

      “Many elements (of Indonesian bank’s business) will be treated the same as for local banks in the upcoming agreement, “Muliaman said.

       Both authorities are scheduled to sign the bilateral agreement soon, after recently completing prolonged negotiations on licenses and operations of foreign banks ahead of the ASEAN Economic Community’s (AEC) liberalization of banking and financial services in 2020, he added.

       Indonesian banks have complained that current regulations make it hard for them to operate in Malaysia, with a high minimum capital requirement of 300 million ringgit for a licensed bank including locally incorporated foreign banks.

       With the call for financial integration in ASEAN, Malaysia has agreed to ease restrictions imposed on Indonesian banks operating in the neighboring country following complaints of unequal treatment in comparison with other foreign banks.

       Bank mandiri is the only Indonesian bank operating in Malaysia, but only operates with limited access. Bank Mandiri is still unable to operate as a full branch as it cannot meet the capital requirement imposed by the Malaysian central bank.

       In future, the minimum capital requirement may be lower than 300 million ringgit if Bank Mandiri acquires the status of Qualified ASEAN Bank (QAB), which will be applicable only to “indigenous” ASEAN banks that are based in ASEAN countries under to ownership of ASEAN citizens.

       A QAB is descibed in the ASEAN Banking Integration Framework (ABIF) guidelines, which aim to integrate financial services in the regional grouping by enacting reciprocity principals, when an ASEAN country has given leniency to one of its counterparts, it should provide similiar treatment to other ASEAN members.

       Under the QAB concept, banks that acquire the status will be able to operate in region and enjoy aqual treatment with local banks.

       Muliaman said the OJK had yet to receive any proposals from Indonesian banks wanting to become QABs, and added that the agency was also actively seeking negotiations with other ASEAN countries, such as Thailand and Singapore.

       “We are still trying (to negotiate) and ansure that mutualism and reciprocity principals will be upheld,” he added.

       The upcoming bilateral agreement with Malaysia will be a more detailed deal to follow up a memorandum of understanding (MOU) signed by OJK’s Muliaman, Bank Indonesia governor Agus Martowardojo and BNM governor Zeti Akhtar Aziz on Dec. 31,2014 in Jakarta.

       The 2014 MoU highlighted a commitment  by Indonesia’s and Malaysia’s banking authorities to uphold equal reciprocity and national treatment whenever banks from either  country wished to enter or expand their operations in each other’s jurisdiction. The OJK has decided to use the 2014 MOU with BNM as a model for future bilateral agreements on the integration of financial services in ASEAN with other countries in the region.

(source : TheJakartaPost, Tuesday  February 9, 2016)

noted :

1.      Direct Speech      :  Future Tense

(S + will + bare infinitive S + be (am/is/are) going to + bare infinitive)

“Many elements (of Indonesian bank’s business) will be treated the same as for local banks in the upcoming agreement, “Muliaman said.

2.      Indirect Speech   :  Past Perfect Tense

S + had + past participle (V-3)

Muliaman said the OJK had yet to receive any proposals from Indonesian banks wanting to become QABs, and added that the agency was also actively seeking negotiations with other ASEAN countries, such as Thailand and Singapore.

Direct Speech      :  Present Continous Tense

S + be (am/is/are) + present participle

       “We are still trying (to negotiate) and ansure that mutualism and reciprocity principals will be upheld,” he added.