TUGAS SOFTSKILL

Presence of Foreign BanksBranch Office vs. Subsidiaries

CHOOSING ideal legal form for foreign banks that want to do business in a country is not so easy. Variety of options are available such as international banking facilities, offices (representative office), agency, branch or subsidiary company (subsidiary). The choice reflects the depth of market intervention to the recipient country. Such representative offices have limited authority, must not accept deposits, extend credit or make a transfer. Branches offer full banking services and the headquarters responsible for its obligations. Separately incorporated subsidiary of the parent company. Subsidiary is an independent legal entity conducting banking activities are complete and operates as a separate company from the parent company, but owned or controlled by the parent company.Law No.10 of 1998 on banking does not provide many options regarding the legal form of foreign bank presence. Foreigners who wish to conduct business in the banking sector can only do so in three ways, namely the opening of a branch office, the establishment of a new bank and buy bank stocks that have been established, directly or through the stock exchange. Required for the opening of a branch office of a bank that has a good ranking and reputation. Total assets owned by foreign banks that want to open a branch office shall be included in the world's two hundred and effort required to place funds in rupiah or foreign currencies at least Rp 3. trillion. The opening of a subsidiary can only be done by partnering with domestic individuals or legal entities. Legislation in the field of banking does not recognize a wholly owned subsidiary by a foreign (wholly owned subsidiary).The existence of a branch office of a foreign bank in Indonesia has been through a long historical process. At the beginning of the New Order, the Presidium of the Ampera Cabinet instructed the Ministry of Finance and Central Bank Governors to give business licenses to some foreign banks to operate in Indonesia. Instruction in the number of foreign banks are limited by the principle of reciprocity and the role of the country of origin of foreign banks in question as a source of foreign investment and economic assistance or resources. Reason beroparasi permissibility of foreign banks in Indonesia at that time, so that foreign banks can participate and facilitate the entry of foreign investment and the implementation of the import / export in Indonesia, development and production of domestic industries and the expansion of employment opportunities and increased productivity for the national potential. State Minister of Economy on February 20, 1968 stating that all pemerinta agencies, entrepreneurs and niagawan showed a positive attitude towards the presence of foreign banks. In such a positive attitude, including the attitude to avoid and circumvent policy and regulatory maze and does not guarantee job security for foreign banks and violated the principles of common banking. Priori restrictions such as in terms of current accounts, deposits, and credit will narrow the activities of foreign banks so inadequate compared with the risks they face in operating in Indonesia.Cabinet Presidum instruction is realized with the publication of Law No.14/1967 on Banking and Regulation 3 of 1968 concerning Foreign Bank. In government regulation, among others, determined that the foreign banks that dealt in the field of commercial banks can only be established as a branch of an existing bank abroad or a foreign joint venture banks between banks and national banks incorporated in Indonesia, and the mixture bank must be a limited liability company. Based on the Government Regulation 11 foreign banks to get permission for doing business in Indonesia which consists of 10 bank branches located outside the country and one joint venture bank. Ten foreign bank branch is National City Bank of New York that turned into Citibank, Bank of America, Chase Manhattan Bank, American Express Bank, The Chartered Bank which later became Standard Chartered, Algemene Bank Nederland which later became ABN-Amro, Deutsche Bank, Hong Kong and Shanghai Banking Corporation (HSBC), Bank of Tokyo-Tokyo turned into Mitsibishi Bank and Bangkok Bank. While banks are Bank of mixture is a mixture of PT Bank Perdania.Besides allowed to conduct business as a commercial bank, foreign banks are also given the opportunity to run a business development bank, but only foreign bank in the form of joint venture banks. Place of business for foreign banks restricted in Jakarta while foreign development banks can set up and run a business in Jakarta and in other places along there is a real need. In conducting its business activities, foreign banks are prohibited from collecting funds in savings. The presence of ten branches of foreign banks are then given full assurance in the government's commitment to the WTO / GATS in 1998. Meaning that ten foreign bank branches are allowed to continue to operate in the form of branches and any changes in government policy does not affect anything for them.The global financial crisis that occurred in 2007/08 has raised the debate about the foreign presence in the banking sector. This is partly triggered by the experience of countries in Central and Eastern Europe. The question that arose was whether the bank transmits its financial difficulties by reducing loans to the customers of the branch or subsidiary customers. Pengalama Central and Eastern Europe in the early crisis of 2007-2008 shows that the financial problems experienced by the head office of a bank is transmitted in cross border into Eastern Europe and Tengan. As a result, the company difficulty obtaining credit from foreign banks headquartered experiencing financial difficulties. The reason is banks are reluctant to give credit to its customers in lua country. This condition can lead to this kind of Volatility and instability in the country where the foreign bank branches operating. This experience raised questions about whether the presence of foreign banks in a better state in the form of subsidiaries.Understood that the presence of foreign banks can bring benefits to the banking industry in the recipient country. Facilitate access to foreign banks recipient (host countries) for new products and technologies and increase the efficiency of financial markets and competition. The presence of foreign banks in Indonesia in the form of a branch office brings its own problems. In addition to natural risks such as those in Central and Eastern Europe are more and more micro is is the obligation of foreign bank branches participated in the Deposit Insurance Agency (LPS). Branch office of a foreign bank participation raises legal issues if the foreign bank headquarter his business license revoked and was liquidated. Assets in bankruptcy law offices are part of the assets of the head office so that if the bank's head office revoked the business license branch office assets become part of the overall assets and the liquidation of the bank's assets will be used to pay all liabilities of the bank. Meanwhile, liabilities to customers of the branch office deposits up to a certain limit is the amount of liability LPS. Under such conditions, the potential for a conflict of laws arises.Legal question is whether interest should take precedence over the interests of LPS other creditors of the bank headquarters. Article 59 of the Law stipulates that LPS LPS control of bank assets are liquidated and the sale of the assets used for payment prior to the LPS to LPS refund that has been used to pay depositors. Under Law LPS interest should take precedence, the reason is that bank branches operating in Indonesia that is subject to the laws of Indonesia. Participation in the agreement as a member of the LPS must explicitly stated requirement that the assets of the branch office of a foreign bank must first be used to pay its obligations in Indonesia. Transnational bankruptcy is a complicated issue and requires rules that are also cross-country. But hard to imagine the presence of liquidation rules that apply internationally. Therefore it was thought that the legal form of a branch office of a foreign legal entity changed to Indonesia in the form of subsidiaries.Bank in the form of subsidiaries (subsidiaries) has its own character and problems. Bank holding companies tend to centralize all strategic decisions and risk management at headquarters. Parent company to limit its legal liability for the capital invested in subsidiaries. Regulatory body in the country of origin of a lot more involved in the preparation of risk models and obtain more information about the condition of the parent company but are not responsible for the potential failure of a subsidiary. Consequently recipient countries take final responsibility in providing emergency liquidity assistance and collecting the remains of assets in the event of a crisis. Recipient countries are also party required to maintain financial stability and protect the taxpayers who ultimately bear the cost if a bank is insolvent. Bank holding company as the owner is legally entitled to require their companies to comply with any business strategy that they deem appropriate in order to maximize profits. Though among the business strategy may exist that are not in line with the interests of the subsidiaries.Open market access requires safety signs and increased kersama between countries. Foreign presence is needed but not the short-term (short term medicine) and cause long-term negative implications for both individual banks and national banking system. Increased cooperation with other state bank supervisory authority is one option to address the risk of foreign presence in the banking sector. International cooperation is important because "banks are global when living beings, but very nationalistic when dead".


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HOW MANAGER AND WORKES RATED TEN JOB CONDITONS Job Conditions                                                                                  workers’ Rating  / Manager’s Rating Full appreciation for work done                                                                 1st                           8th           Feeling “in” on things                                                                                     2nd                          10th Sympathetic  understanding  of personal problem                            3rd                           9th           Job Security                                                                                                        4th                           2nd Good wages                                                                                                       5th                           1st Interesting Work                                                                                              6th                           5th Promotion and growth with company                                                    7th                           3rd Management loyalty to workers                                                                               8th                           6th Good Working conditions                                                                             9th                           4th Tactful disciplining                                                                                           10th                         7th