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DPR RI Approved the Ratification of AFAS Protocol in Indonesia

April 26, 2018

The Plenary Meeting of the House of People’s Representative (DPR RI) approved the Bill regarding the ratification of the Protocol to Implement the Sixth Package of Commitments on Financial Service Under ASEAN Framework Agreement on Service or the AFAS Protocol become a law.

 Vice Chairman of the DPR RI, Taufik Kurniawan, after leading the plenary meeting said, with the AFAS Protocol, it can be a legal basis for domestic banks to expand into neighbors country in ASEAN region, and encourage healthy competition in banking industry. But, Taufik warned that the goverment should also take a look at the potential for foreign domination in the banking sector.

 “The goverment must ensure that our banks are ready to expand overseas. Because when our banks aren’t ready yet, the foreign banks will enter and dominating the national banks. In addition, goverment must also ensure the benefits of this regulation that could be implemented and ensure that the existing agreements could be implemented in all corresponding countries,” said Taufik at the DPR RI Building, Senayan, Jakarta, Thursday (26/4/2018).

 Taufik also requests the goverment to make sure that there is not any double regulation which applied in each partner country, which could slow down domestic banking to expand overseas. He emphasize that Indonesia should really get the benefits and advantages from the agreement of AFAS Protocol.

 In his report, Vice Chairman of Commission XI of the DPR RI, Achmad Hafisz Tohir, hopes that the AFAS Protocol will provide legal basis for the government and state institutions, as well as the financial services sector performer to implement the protocol and provide benefits for Indonesia.

Hafisz said, those benefits are the creation of legal certainty in running businesses in financial service sector, improve the quality and quantity of financial service products that can be utilized by other business performers, increased the competitiveness of the national financial service sector, the opportunity to expand the financial services market in ASEAN region, and encourage the increased trade, investment, and economic cooperation between parties.

 “In the first-level discussion about the opinion of political factions, 8 factions agreed, while 2 other factions agreed with some exceptions. Meanwhile the final judgment of the ministry, the goverment is committed to seriously carry out all the annotations given during the implementation of the 6th AFAS Protocol.” Hafisz explained.

 Meanwhile, Finance Minister Sri Mulyani Indrawati said that the AFAS Protocol is a cooperation to open the access of ASEAN financial services market which is believed to be able to secure the interests of Republic of Indonesia, especially in the financial service industry to create prosperity for Indonesia.

 AFAS Protocol also opens the opportunities for national banking to ASEAN market. Currently, he said that there are only few national banks which have branch offices of business units abroad. One of the causes of the low penetration banking in the global market are the various provisions and conditions which are considered difficult.

 “We believe the AFAS Protocol will improve the competitiveness of domestic financial services providers, encourage the growth of financial industry which in the end would be advantageous for the people of Indonesia,” Finance Minister Sri Mulyani hopes.