Universitas Gadjah Mada
Faculty of Economics and Business

When the Indonesian economy is more open to the world, the banking sector competition becomes unavoidable. Master of Modern Corporation Strategy, Michael Porter, stated if the corporations want to win the competition they must have the power of victory. The Indonesian banking sectors must prepare carefully to win the global competition. Moreover Indonesia will face the ASEAN Economic Community (AEC) on 2015 for real sector and capital market, whereas for banking sector will begin on 2020. The Indonesian banking sector must gather the force to be a key success for winning competition in global business.  Business policies and banking institution capability must be developed well.

The Indonesian banking sector’s challenge on the global competition was explained greatly by Budi Gunadi Sadikin, CEO PT Bank Mandiri (Persero), Tbk. Ikatan Bankir Indonesia (IBI) invited Budi Gunadi Sadikin came as a special guest for CEO Talk: Indonesian Banking Sector Facing Global Competition (30/10) at BRI Auditorium Magister Science and Doctoral Program FEB UGM. IBI as professional institution of banker drives the Indonesian bankers to develop their professionalism, do the good banking business practice, and implement the good governance to create a powerful national economy. One of the ways is educating the communities in the academic discussion forums.

Budi Gunadi Sadikin explained that national banking sector actually has impressive achievement. The productive credit grows fast and hits 20%. The infrastructure credit also grows fast and reaches 26%. Moreover, the efficiency of the national banking sector competes the foreign banking. PT Bank Mandiri has 38,7% for current efficiency ratio (CER) above the several foreign banks such as OCBC that achieves  34,96%. Meanwhile the list of the good indicators above does not help the banking sectors to easily enter the global level competition. Otherwise, foreign banking was really easy to develop the network in Indonesia. The banks from Singapore and Malaysia can open up their branches seven times more than that of in the origin country. It is very contrast with national bank such as Bank Mandiri that only has one branch in Singapore. The government should really concern with some barriers to enter the international market for the national banking sector.

Not only external factor that hampers the national banking development but also the internal condition of national economy which is very fragile and volatile makes national banking very sensitive with economic fluctuation. Irwan M. Habsjah, the Director of Research, Assessment, and Publication of IBI said that Indonesia has some internal problems such as high inflation, low quality of infrastructure and human resources, and weakness of labor regulations. "Indonesia needs the development of technology so we can reduce the dependency of natural resources, increasing of human resources quality, and increasing of capital power", said Irwan M. Habsjah.

Sources: Poppy/FEB