BBL opens 3rd Indonesian branch in Medan
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BANGKOK BANK yesterday opened its third branch in Indonesia in Medan to support Thai and foreign investors checking out opportunities in the country's high growth market. Branches in Surabaya was opened in March 2012 and Jakarta in 1968. Medan is the 26
BBL president Chartsiri Sophonpanich said Medan has potential for agricultural businesses, while Surabaya is ripe for manufacturers.
What the bank found in Indonesia is it is a high growth market and businesses can cash in on the growth through investment and trading.
Even though the Indonesian economy is fragile due to capital outflows, it is undergoing a transformation to deal with the uncertainties, including capital movements.
Indonesia is developing itself aggressively to benefit from market integration and many businesses are starting to revise their strategy to improve their competitiveness by expanding overseas to diversify their production bases.
Indonesia is similar to Thailand 20 years ago. Its per capita income is US$3,000 while Thailand is at $5,000-$6,000.
Its speedy growth is manifested by robust vehicle sales of 1 million autos and 7 million-8 million motorcycles a year.
Indonesia is interesting for investors looking for low-cost labour.
The Surabaya sub-branch started turning a profit in May, showing that BBL is moving in the right way to grow from this market.
Among the 13 countries where BBL maintains a presence, Indonesia showed the strongest profitability and loan growth despite its assets ranking fourth in the bank’s international network.
Overseas branches account for 15-18 per cent of total loans, or US$8 billion.
Chalit Tayjasanant, general manager for Indonesia, said the outstanding loans of the two branches are expected to rise to US$1 billion this year from $750 million last year. About 85 per cent of customers are local and foreign, while 15-16 per cent are Thai.
Indonesian NPLs are lower than 2 per cent and it should be less than 1 per cent after the bank writes off bad assets.
Chartsiri said the bank will try to approach Thai customers visiting Indonesia as making several trips will help customers gain exposure before considering investing in the country.
As a bank, it should be ready to serve customers once they are fully prepared to expand their business in order to build its customer base and grow along with customers.
Asean and China are important markets, and after the Medan branch, the bank is studying Cambodia.
“The actual investment by Thai companies might not be clear as this stage of investment needs time, but we do believe having more branches will help provide comprehensive information to them as guidelines for decision-making,” he said.
Thai customers, especially mid-size corporations, have to find places outside the country to secure resources and production bases.
Thai conglomerates in Indonesia are led by PTT, Siam Cement Group, Banpu and CP Group.
Thai mid-size corporations are in textiles, auto parts and furniture.
