AGENDA
      AGENDA
         I. INTRODUCTION
         II. BANKING REFORMS & LIBERALIZATION
         III. BANKING LIBERALIZATION SINCE THE OUTBREAK 
              OF THE FINANCIAL CRISIS
         IV. LESSONS LEARNED FROM INDONESIA 
              EXPERIENCE
         V. BANKING LIBERALIZATION IN THE  CONTEXT OF 
              MULTILATERAL AGREEMENTS
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   I.INTRODUCTION
   I.INTRODUCTION
                          DEREGULATION PACKAGE  
                           DEREGULATION PACKAGE  
                          
                            in the real sector : invite foreign direct 
                          
     Crash of the            in the real sector : invite foreign direct 
                            investment (Act No.1 of 1967)
     international           investment (Act No.1 of 1967)
                          
                            in banking sector (Act No.14 of 1967) : 
     oil market (the       
                             in banking sector (Act No.14 of 1967) : 
                            October, 1988 policy package (the policy on 
     mid-1980s)              October, 1988 policy package (the policy on 
                            foreign entry in banking sector)  
   Deteriorated             foreign entry in banking sector)  
                          
                            liberal regime for foreign exchange flows 
                           
     economy                 liberal regime for foreign exchange flows 
   Issued a              MULTILATERAL AGREEMENTS (WTO, 
                           MULTILATERAL AGREEMENTS (WTO, 
                          APEC, ASEAN)
     series of             APEC, ASEAN)
                           Liberalization process in banking sector : 
     deregulations          Liberalization process in banking sector : 
                           to strengthen the banking regulations and 
     by the                 to strengthen the banking regulations and 
                             oversight framework
     Government            oversight framework
                             should be integral part of any liberalization 
                            should be integral part of any liberalization 
                             program
                              program                                    3
      II.   BANKING REFORMS &                
      II.   BANKING REFORMS &                
            LIBERALIZATION
            LIBERALIZATION
      SERIES OF FINANCIAL AND BANKING DEREGULATION PACKAGE  
      1. June 1983 policy package : 
         3 main points i.e. lifting credit ceiling and liberating deposit 
           interest rates and phasing out Bank Indonesia liquidity credit. 
         The aim of policy : to reduce limitation for banks to extend 
           credits  and  to  eliminate  provisions  on  bank  deposit  interest 
           rates previously prescribed by Bank Indonesia.
      2. October 1988 policy package
         This  package  set  forth  financial,  monetary    and  banking 
           policies, especially  easing of restrictions relating to banking 
           institution covering the opening of new  private banks, bank 
           offices  and  non  bank  financial  institutions  and  various   
           prudential banking regulations. 
         The  impact  of  policy  package  :  the  establishment  of  large 
           number of new private banks, both domestic and joint venture 
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           banks 
        II.    BANKING REFORMS & LIBERALIZATION 
        II.    BANKING REFORMS & LIBERALIZATION 
        (Cont.)
        (Cont.)
       3. The March 25, 1989  policy package
          Foreign exchange banks and non-banks financial 
            institutions were required to maintain a net open 
            position  at  not  more  than  25%  of  stockholders 
            equity;
          Offshore borrowing ceilings for foreign exchange 
            banks  and  non-bank  financial  institutions  were 
            eliminated;
          Commercial banks, development banks, and non 
            financial  institutions  were  permitted  to  lend 
            investment  credits  and  to  undertake  equity 
            participation with a certain requirement. 
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        II.    BANKING REFORMS & LIBERALIZATION
        II.    BANKING REFORMS & LIBERALIZATION
               (Cont.)
               (Cont.)
       4.   The February 28, 1991 policy package
          This package sets forth :
           The Basic Scheme for Bank Supervision;
           Provisions related to :
              Licensing,  ownership,  and  management  of  banks, 
                covering  the  foundation,  ownership  and  management 
                banks,  opening  of  offices,  and  equity  participation  of 
                banks in overseas financial institutions;
              Prudential    principles,  covering  capital  adequacy 
                requirements, legal lending limit, and net open position;
              Supporting factors for banking operations.
      5.   The May 29, 1993 policy package 
          This package covers prudential measures that should be fulfilled 
          by  bank  i.e.  Capital  Adequacy  Ratio,  regulation  concerning 
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          allowance  for  earning  assets  losses  and  provision  on  legal 
          lending limit.