BANKING ON FINANCIAL INTEGRATION

By Tian Yuan

Exclusive interview with Governor of Bank of China (Hong Kong) Jakarta Branch Zhang Chaoyang

Financial integration is a key pillar of the Belt and Road Initiative. By the end of 2017, a total of 10 Chinese-funded banks had established 68 first-level branches in 26 countries along the Belt and Road routes. How should financial institutions contribute to construction of the Belt and Road? How can we promote bilateral cooperation between China and Indonesia?With these questions in mind, I sat down with Zhang Chaoyang,governor of the Jakarta branch of Bank of China (Hong Kong)Limited and honorable president of China Chamber of Commerce in Indonesia.

>>China Report ASEAN: Bank of China first began operating in Indonesia eight decades ago.Why is the Jakarta branch so unique?

Zhang Chaoyang: The Jakarta branch of Bank of China has a long and illustrious history.In 1938 when Indonesia was served by only a few foreignfunded banks such as HSBC and Standard Chartered, Bank of China became the first financial institution dedicated to serving local Chinese communities in Indonesia and Chinese companies doing business in the Southeast Asian country.Later, Bank of China retreated from the Indonesian market.In 2003, when China and ASEAN established a strategic partnership, the bank returned to Indonesia. This year marks the 80th anniversary of its first branch in Indonesia as well as the 15th anniversary of its reopening in the country. With the advancement of the Belt and Road Initiative and the China-Indonesia ties reaching an unprecedented apex,increasing numbers of Chinese and Indonesian enterprises are entering each other’s markets to explore opportunities. Moreover,the Indonesian economy maintains an annual growth rate of over 5 percent. In this context,I believe that Bank of China will make greater contributions to promoting friendly cooperation between the two countries.

Zhang Chaoyang,governor of the Jakarta branch of Bank of China (Hong Kong) Limited and honorable president of China Chamber of Commerce in Indonesia.

>>China Report ASEAN: What are the key features of your Jakarta branch in terms of targeted clients and product structure?

Zhang: Presently, the Jakarta branch oversees nine subbranches across Indonesia.It has joined hands with the Chinese embassy and consulates in Indonesia to set up three visa centers. In terms of client demographics, it is slightly different from its counterparts and mainly targets three categories:Chinese companies settling in Indonesia due to the Belt and Road Initiative, excellent stateowned enterprises of Indonesia and local enterprises that have established close economic relations with China. These clients share one thing in common:They have all made positive contributions to deepening China-Indonesia economic cooperation,accelerating Indonesia’s economic and social development especially in people’s livelihood and infrastructure and consolidating people-to-people communication between China and Indonesia.

>>China Report ASEAN:In recent years, what breakthroughs has the Jakarta branch made in enhancing service quality?

Zhang: Adhering to the principle of “boosting business while controlling risks,” the Jakarta branch attaches great importance to improving service quality to enhance the quality of development. In 2017, to better meet the needs of ASEAN integration especially in the financial sector, Bank of China integrated its branches in Hong Kong and Southeast Asian countries to form a regional flagship banking conglomerate—Bank of China (Hong Kong)Limited, which maintains sufficient cash reserves to satisfy the financial demands of Southeast Asian clients. This collaborated operation method has also resulted in substantial improvements in management efficiency and market competitiveness.

Relying on its advantages in funds, products and human resources, the Jakarta branch has become an important player of the newly-established banking group. Compared to last year, it has achieved major breakthroughs in deposit and loan volumes and other businesses, with annual net profits exceeding US$30 million and rate of bad debts dropping to a historical low of 0.09 percent.

In addition, Indonesians account for more than 95 percent of the employees of the Jakarta branch, of whom almost all counter clerks can speak Chinese to provide customized and convenient service for clients.

By the end of 2017, a total of 10 Chinesefunded banks had established 68 first-level branches in 26 countries along the Belt and Road routes.

Annual net profits exceed US$30 million and rate of bad debts drops to a historical low of 0.09 percent.

Indonesians account for more than 95 percent of the employees of the Jakarta branch, of whom almost all counter clerks can speak Chinese to provide customized and convenient service for clients.

I believe that Bank of China will make greater contributions to promoting friendly cooperation between the two countries.

>>China Report ASEAN:As construction of the Belt and Road accelerates, what measures has the Jakarta branch taken to promote the internationalization of RMB?

Zhang: As the biggest offshore RMB center in the world, Bank of China (Hong Kong) undertakes over 70 percent of offshore RMB business and plays the role of“market maker” in the RMB settlement and transaction market. Along with the Belt and Road construction, this advantage has been extended to Indonesia, enabling our bank to play a greater role in RMB transaction and financing in the Southeast Asian country. Since our bank resumed its operation in Indonesia in 2013, we have remained committed to serving Chinese enterprises going abroad. Chinese companies that have gained footholds in Indonesia including PetroChina,China National Offshore Oil Corporation, Sinopec, Shenhua Group, Anhui Conch Cement Co., Ltd., Tsingshan Holding Group, China Road and Bridge Corporation, China Harbor Engineering Co., Ltd. and China State Construction Engineering Corporation, are all loyal clients of our bank. They have high demand for RMB-related financial services.

Given that the RMB already functions as an international reserve currency, it is becoming increasingly popular in Southeast Asian countries including Indonesia. Our Jakarta branch has become Indonesia’s largest RMB cash importer and exporter. Today, more and more Indonesian students go to China for further education. The Jakarta branch provides Giant Panda Dual-Currency Debit Cards in RMB and IDR for those students and their families, which can be used to withdraw cash at Bank of China’s more than 47,000 ATM machines around China, open an account in another city and facilitate visa application.

>>China Report ASEAN: How will the Jakarta branch prioritize promotion of China-Indonesia cooperation this year?

Zhang: First, according to the needs of the aforementioned three categories of clients, the Jakarta branch will support the development of enterprises both upstream and downstream of the industrial chain. In particular,it will provide a package of financial services, both corporate and personal, for Chinese companies going abroad,Indonesian enterprises with close economic ties to China and excellent enterprises enjoying the advantages of industrial clusters.

Second, China will host the first China International Import Expo, which will foster ideal business opportunities. We want to give greater support to Indonesian enterprises looking to participate in the Expo and encourage them to invest in China. The Jakarta branch can refer such enterprises to the head office of Bank of China.

Third, within the framework of Indonesia’s current financial regulation system, the Jakarta branch will further expand RMB products and enhance service quality, especially to meet large local financial institutions’demands for RMB services by providing better cash returns through rational and efficient management.

Finally, Indonesia boasts colorful traditional culture, rich tourism resources and unique local products, which are worth recommending to our partners so they can explore the myriad business opportunities in Indonesia.