Abstract
The legal work involved in systemic bank restructuring is an essential element of the government's microeconomic efforts. The existence of foreign banks in Indonesia is developing related to business and investment needs, where Indonesia is very need foreign capital but the presence of foreign banks in Indonesia from a legal perspective continues to experience problems, such as regarding the term of foreign banks. The research was conducted using a normative-legal research method. The research site was conducted at Bank Indonesia, the Office of the Financial Services Authority, the Office of the Deposit Insurance Corporation, the Indonesian Ministry of Foreign Affairs. The results show that the legal status of foreign banks in terms of two aspects, namely legal personality and legal capacity. Personality legal of foreign banks in Indonesia are branches or representatives of banks domiciled abroad, have license to operate in Indonesia according to applicable regulations in Indonesia, have rights, obligations and responsibilities that must be conducted according to the law in Indonesia. Legal capacity of foreign banks in Indonesia is a form of foreign bank legal entity following the form of its head office legal entity abroad. Supervision of foreign banks is conducted through coordination and cooperation between the host supervisory authority and home country as the main requirement for the effective supervision and operation of foreign banks and settlement of disputes can be made based on an agreement between the two parties to settle it with an international arbitration body, namely if the dispute resolution process is the court’s authority in the country concerned. Keywords: Bank; Foreign Banks; Investment; Legal Framework DOI : 10.7176/JLPG/85-23 Publication date :May 31 st 2019
Highlights
Indonesia is a legal State that aspired to realize people welfare
All descriptions in the status of foreign banks in Indonesia indicate that foreign banks are domiciled abroad which have obtained license to do activities in Indonesia whose legal entity forms follow the form of the company’s central legal entity, but in activities in Indonesia must be subject to regulations legislation in Indonesia and in the event of a dispute arises, the settlement is based on an agreement between the two parties unless the dispute that occurs is the authority of the court in Indonesia
Legal personality of foreign banks in Indonesia are branches or representatives of banks domiciled abroad, have license to operate in Indonesia according to applicable regulations in Indonesia, have rights, obligations and responsibilities that must be conducted according to the law in Indonesia
Summary
Indonesia is a legal State that aspired to realize people welfare. Clearly, the ideals of the welfare State are affirmed in the opening of the 1945 Constitution of the Republic of Indonesia and in order to realize this objective, Indonesia certainly needs huge funds as capital in the implementation of national development. Banking regulations in Indonesia do not clearly regulate this matter, so that currently banks are Indonesian legal entities even though foreign majority ownership is still considered a non-foreign bank and subject to the Banking Laws while foreign bank branches or representatives are not regulated in the Banking Laws but in the Investment Laws. These conditions arise the phenomenon of inequality between foreign banks and national banks due to unclear arrangements regarding the status, position and requirements of foreign banks in the banking system in Indonesia. He built his analysis about the legal function as a mechanism of integration or integrator where the main functional observed in a social system, consisting of adaptation as an economic process, goal pursuance as a political process, pattern maintenance as a process socialization,
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