Korea and Indonesia have come up with specific blueprints for restructuring their respective banking and financial sectors post the Asian financial crisis. Even though there have been many changes recently in the regulations of both countries' banking sector, foreign banks have tended to operate in certain non-traditional types of markets (e.g., foreign exchange, derivatives and international banking activities generally) which may require greater or different regulation. In addition, the domestic regulations' sensitivity to foreign banks has increased because these foreign banks constitute the entry of a foreign enterprise into each country's traditional market. While foreign banking activities in Korea and Indonesia have grown in terms of business volume, market share and number of branches, banks may operate internationally through the certain types of foreign banking establishments such as a foreign commercial presence: branches, representative offices, subsidiaries and joint ventures or consortia. Currently some Korean banks are operating their businesses in Indonesia; Hana Bank as a foreign exchange bank, and Korea Exchange Bank and Woori Bank respectively as a joint venture bank. However, there is no Indonesian bank entry at all in Korea yet. This seems to show that there have not been many business developments between Korea and Indonesia. In the recent new regulatory environment and situation, foreign banks are now grappling again with dramatic changes in their own operating environment and are now facing new developmental and competitive challenges by domestic banks in Korea and Indonesia. This paper reflects such circumstances and legal review of foreign bank regulations under the new banking laws and system in Korea and Indonesia, and suggests some guidelines for foreign banks either from Korea or Indonesia.
Ⅰ. Introduction Ⅱ. Foreign Bank Regulations in Indonesia 1. Bank Regulation in General 2. Foreign Bank Regulation Ⅲ. Foreign Bank Regulations in Korea 1. Banking Reform and Regulation in General 2. Foreign Bank Regulation Ⅳ. Common Issues Regarding Foreign Bank Regulation 1. Possible Types of Foreign Bank Entry 2. Capital Requirement for Foreign Bank Branch Ⅴ. Conclusions