With so many commercial banks in Bali, competition among the smaller ones can be fierce. And now the island has a new bank, BPR Legian, a people’s credit bank headed by Medan native and Bali resident Christopher Wilaras, who says it will focus on areas not currently the focus of the banking sector: farming, small business and women. He spoke with Carla Albertí de la Rosa about how he aims to achieve his goals.
Christopher Wilaras: I believe in the people in Bali and in the governor of Bali.
You’re principally involved in the property sector, constructing villas. Why did you decide to branch out into banking?
Banking correlates with property. Some customers might be building condominiums and they want to get credit. So rather than them going to a regular bank we can have them use our bank. They’re correlated.
What is the process of establishing a bank like?
It’s very long and very hard. The process involves licences from Bank Indonesia (central bank). They give different licenses and then they have to do what they call a Fit and Proper test to make sure that what has happened before won’t happen again, like with Bank Century. So Bank Indonesia’s regulations are a lot tighter now. They ask you psychological questions; they check your background. I think it’s for the better in the banking business, so we won’t have so much embezzlement and negative things happening. It takes from six months up to a year if they approve you.
Under Bank Indonesia regulations, what is the capital adequacy ratio (CAR) that’s required for your bank?
I believe it’s 20 percent, if I’m not mistaken.
What is the range of services you’re providing?
My weight is going to be very competitive with other banks as far as the certificate of deposits is concerned. The bank that we have, BPR Legian, is more concentrated with small business and we mainly want to concentrate on farmers; they are not being catered to. We want to concentrate on farming businesses such as cows, rice or chicken.
A lot of the things that we’re buying are actually imported from Java because many farmers cannot be catered to. That’s what my emphasis will be on the branch in Tabanan. In the branch in Badung I want to concentrate on small businesses. Also, there’s no women’s bank in the whole of Bali. There’s no bank just catering to women. That’s going to be one of our major focuses. In Bali especially, it’s the women who handle a lot of the daily chores. A lot of women work for me and we should concentrate on becoming the first women’s bank.
We have Western Union, daily transactions, motorcycle and car financing, real estate financing and small businesses financing. We use SIGMA as our IT system. A lot of small bank failures in Bali are because there’s not a very good system. SIGMA is a big investment but it creates a system for the big banks. Normally the small banks create their own system and that’s when you run into problems.
The biggest problem in banks is embezzlement and number two is what you call the NPL, non-performing loans, when you don’t pay back. The problem with NPL happens when there is no good IT system. A manager will come to your bank and sometimes he’ll approve a loan for his friends or family. But with the system they can’t do it because they must follow it. If a manager can loan and approve to whomever they want, that’s where a lot of the failures of the banks come from. So we’re having SIGMA this June in all our banks. It will be the system that approves the loan, not the manager.
With so many other banks in Bali, including foreign ones such as Australian giant Commonwealth, what makes you think there’s room for one more?
Big banks are not concentrating on small businesses. With this bank we would like to be able to focus on small enterprises. A lot of the big banks are neglecting a lot of small businesses here, especially travel businesses. There are not enough people who want to service these type of businesses. For small businesses to get a loan from a big bank is very difficult. They are being left out and I feel there’s a big need for them.
How do you compete with the lower lending rates of commercial banks?
We’ll make it very competitive but yet we’ll concentrate on the small businesses. Our lending rates are 1 or 2 percent higher. That’s not much higher. We will focus on the small segment and on women. I want to take this bank into a different segment.
Many believe that BPRs are struggling due to unfair competition from commercial banks. Indonesian Banks Association (Perbanas) chairman Sigit Pramono said that the central bank should intervene and that commercial banks should not operate directly in rural areas and the BPRs should not enter the cities and suburban areas. What do you think about that?
I think that the BPR should be given the same opportunities as those available to the bigger banks, but let us concentrate on the smaller businesses that nobody is catering to. It should be OK for bigger banks to go to rural areas. To me, it should be fair competition.
Is BPR Legian going to be solely confined to Bali, or will it branch out to other islands?
We only want to concentrate on Bali.
Turning to the property sector, how is it performing in Bali now?
Despite the crisis we’re still experiencing growth in our market. We believe that you have to do things right. Before we build anything we have all the licences; we don’t over-borrow; and we control the finance. We are developers, which means we own and develop our own property.
Do you think the central government is going to allow foreigners the right to purchase property in Indonesia?
Foreigners are allowed to own [lease] property for 70 years [25 + 20 + 25]; they just approved it. After that you can renew it for another 70 years. Freehold property should be approved and I think it will be approved.
Chia Boon Kuah, the chief operating officer of Singapore’s Far East Organization – one of Asia’s biggest property developers – told us during a visit to Bali for a property conference last week that Bali holds most interest for them but that they won’t invest until the foreign ownership issue is clearer. Is this proof that this hindrance is hurting Indonesia’s property market?
Somewhat, I’m sure, it’s hurting the market. But you still see big hotels opening, even if they don’t have freehold. Because Bali is like a religion: you either believe in it or you don’t. If you believe in it, it doesn’t matter that you can [only] own for 75 years; it doesn’t matter if there’s another bomb. If you believe in it you’ll come back to Bali. That’s what has happened to me and some friends. There’s no other island like Bali. I believe in the people in Bali and in the governor of Bali.
In Bali there are many critics of villa developments; they say they despoil the natural environment. What do you say to such criticism?
I believe that it is destroying the natural environment but at the same time we’re also creating revenue for Bali, and hopefully this revenue will go back to Bali.
In areas that are developed, they should put a hold on so it will not allow them to be overdeveloped. But there’s still a lot of empty land. I believe if you build the right way, using green energy, using good STP – converting dirty water into clean water – I don’t think it should hurt the environment.
We use solar panels, a bio system for the water and we use heat exchangers for hot water, which takes heat from the air conditioners and it converts it into hot water. People should really focus on this. We don’t just say it; we do it.