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If a country’s prosperity were directly related to the number of banks it has, then Indonesia would surely be one of the world’s wealthiest nations. Some 72 domestic banks have operations here, not to mention the 5 state banks and 31 joint venture and foreign banks. Put into perspective, this would be like America having 4,752 banks if the difference in the size of the US and Indonesian economies were taken into account! (the yearly economic output of the US economy – around 11 trillion dollars – is around 44 times the size of Indonesia’s economy – around 250 billion dollars)

But Indonesia is not a rich country. So, the huge number of banks can only mean one thing: Indonesia is overbanked. Massively overbanked.

In Jakarta, bank offices are everywhere. Thousands and thousands of them. While some of the branches are located in plush high-rise buildings, skuzzy ruko (house offices) in the suburbs of the city are also used by banks. So you’ll never have a problem finding a bank office or ATM machine in Jakarta; it just probably won’t be your bank.

But if you do find a branch of your bank, you should get good service. I regularly go to a branch of Bank *** in Central Jakarta to pay my telephone bill. It’s a pretty grandiose affair with copious use of expensive marble. The monthly rental can’t be cheap. But whenever I go there, I am always the only customer! All this for what exactly?

The government has talked about forcing more banks to merge but nothing is ever done. Banks provide many employment opportunities after all. So the government treads cautiously.

When the economy is doing ok there’s no need to worry, but if the s*** hits the fan, as it did back in 1997/98, these banks would drop dead as depositors rush to get out their money. Be warned.

The large number of banks generates fierce competition of course. So to attract customers, banks run lotteries (why don’t Indonesia’s Islamic groups latch onto this?) in which they give away trillions of rupiah worth of consumer goods like cars, motorcycles, televisions and cell phones. And it’s no secret that the lotteries are not particular fair: many of the winners are said to be relations of the directors or employees at the bank.

Most expats in Indonesia have an anecdote or two to tell about their banking experiences. Some are funny and others absurd. Here’s one of mine:

I had gone to a branch of *** to withdraw the relatively large sum of Rp25 million (around US$2,500). The teller asked for my passport, but I did not have it and instead showed her my ATM card. She told me apologetically that that was not good enough: she needed to see my passport. By this time, I was starting to get quite peed off as they know me in the branch and there was no reason for them not to let me have my money. Sensing that I was going to explode, the girl then said actually it was possible for me to withdraw the money. But the maximum withdrawal allowed was only Rp5 million…

… so she made me fill in five withdrawal forms to get my cash! Mission accomplished. In Indonesia there’s always a way…





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