Indonesia is set to be one of the economic powerhouses of the 21st century. Although international organisations have built up a significant presence in the Indonesian banking sector through the sale of banks following the Asian financial crisis in '97, the recent pace of investment has been tempered by high interest rates and high levels of non-performing loans. Now, Indonesia is moving to the centre of the radar as interest rates decline, bad debts come under control and credit demand begins to accelerate.
By 2050, the size of the Indonesian banking sector could rival that of France or Italy, while returns could be considerably higher. Organisations require a clear strategy to match their ambitions to the relative pros and cons of organic growth, acquisition, branch or joint-venture options. This paper outlines the prospects for market growth and assesses the various options for entry and development.
