Malaysia will allow up to three banks from Indonesia to open branches and operate automated teller machines (ATMs) in its domestic market
Indonesia will allow a third Malaysian bank to come in.
Malaysia’s biggest lender, Maybank, has branches in cities across Indonesian provinces and operates ATMs in more than 70 Indonesian cities. The second-biggest lender, CIMB, also has branches and ATMs across Indonesia.
The signing was witnessed by Indonesian President Joko Widodo and Malaysian Prime Minister Najib Razak at the presidential palace in Jakarta following the 11th annual consultation between the two Asean neighbours.
They held a similar meeting in Kuala Lumpur last year.
The annual consultation is the main channel of diplomatic talks between the leaders of the two countries, complemented by senior official-level discussions covering issues from security to the economy.
The banking agreement is expected to end several years of lobbying by Indonesia, Southeast Asia’s biggest economy, to seek reciprocity from Malaysia, Asean’s third-biggest economy.
Indonesia has been making similar demands to Singapore.
“This bilateral agreement is aimed at reducing inequality in terms of market access in the banking sector in the two countries,” Mulyaman Hadad, chairman of Indonesia’s financial service authority, said after he signed the agreement with Malaysian central bank governor Muhammad Ibrahim.
Jakarta and Kuala Lumpur also signed an agreement to boost cooperation to campaign against anti-palm oil lobby groups.