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Two Arab banks look set to enter the Indonesian market to
benefit from the increasing business being conducted by Middle Eastern
investors here, and a third Arab bank may follow, says the country's
special envoy to the region.
"One bank that has confirmed it will open a branch in Indonesia within
this quarter is Al-Baraqah Islamic Bank," special envoy Alwi Shihab
told reporters on the sidelines of a seminar on Middle Eastern
investment. The seminar took place Monday in Jakarta.
Alwi, who is also a former foreign minister, said that the plan had
been approved by the Bahrain-based bank's shareholders and that the
branch would be opened by no later than April.
Another bank expected to open a branch early this year, Alwi revealed,
would be the Qatar Islamic Bank. He said he was due to meet with the
bank's CEO next week to discuss the proposal.
Alwi said that it had not yet been decided how the two banks would
expend their operations here -- whether they would establish branch
networks or acquire local banks.
"They will probably acquire local commercial banks and convert them
into sharia (Islamic) banks," he said.
Besides Al-Baraqah and the Qatar Islamic bank, Alwi said it was also
possible that the Al-Salam Bank would follow suit in order to
complement the investment being made by the Emar investment group,
which will develop a 1,100 hectare tourism complex in Lombok this year.
"Wherever this group invests, they always bring their bank, Al-Salam,
to cater to their financial needs," he said. "These Middle Eastern
countries are very keen on investing in Indonesia. They are very aware
of the potential that we have. However, the number of investment
projects on the table is limited. Therefore, I would urge provincial
administrations to prepare concrete investment proposals to attract
them here," Alwi said.
Besides the country's natural resources, Alwi said that there was also
a growing interest in tourism among Middle Eastern investors.
"The presence of these Arab banks here in Indonesia will also help
local businesses break into the Middle Eastern markets," he said.
Also speaking at the seminar was Umar Thoefur Azis, the president
director of construction firm PT Waskita Karya, who described some of
the challenges faced by Indonesian companies in penetrating the Middle
Eastern markets.
Umar said that in order to make headway in the Middle East, an
Indonesian company would first have to be backed by an international
bank prepared to go guarantor for it as no Indonesian banks had
received accreditation thus far from Middle Eastern banks.
Another crucial issue that needed be considered, especially by
construction companies, was the physical suitability of Indonesian
workers to the extreme Middle Eastern climate.
"Workers have to work at temperatures of more than 37 degrees Celsius,
or sometimes less than 15 degrees Celsius, something that most of them
are not accustomed to," he said.
PT Waskita Karya is currently developing a Rp 100 billion project in
Dubai in collaboration with the Bin Laden Corporation. The company has
also won a Rp 400 billion contract to build a bridge in Algeria in
cooperation with Kojima from Japan.
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