Indonesia may lift curbs on JPMorgan's government business

[JAKARTA] Indonesia may soon lift a ban on government entities doing business with JPMorgan Chase & Co, a year after the US investment bank was shunned over negative comments about the stock market.

Any future business cooperation between the two sides will be based on "trust and respect," Indonesia's Finance Minister Sri Mulyani Indrawati said in an interview on Oct 27.

She didn't outline a time frame for lifting the restriction.

President Joko Widodo's government stopped doing business with the largest US bank after it downgraded the South-east Asian nation's equities by two notches in what it called a "tactical response" following Donald Trump's election victory.

While JPMorgan subsequently upgraded Indonesia's stocks in January, the government maintained the ban on the bank as an underwriter of its rupiah and dollar bonds.

Indonesia is "open" to the idea of reinstating JPMorgan as an underwriter, Ms Indrawati said in reply to a question.

"If it's going to be a need for all of us to have a good relationship, we will restore the relationship."

JPMorgan in the meantime continues to serve its private clients in Indonesia, where it provides investment and commercial banking services.

The bank, which obtained an Indonesian banking license in 1968, posted a net income of 314 billion rupiah (S$31.91 million) in the country last year, according to its website.

Li Anne Wong, a spokeswoman for JPMorgan in Singapore, declined to comment on whether the bank plans to reapply for Indonesian license to underwrite government securities.

Missing Out

JPMorgan has missed out on being part of the Indonesian government's fund-raising program this year. The government raised 512.6 trillion rupiah through the sale of rupiah bonds as of Oct 25 and 142 trillion rupiah through global offerings of sovereign dollar, euro and yen bonds, Finance Ministry data show.

Carlos Hernandez, JPMorgan's head of global banking, said in Tokyo last week that the US bank is committed to doing business in Indonesia, where its analysts have an "independent, unbiased view".

"The government knows that we are supportive of Indonesia and we want to be here helping both the private and the public sector," Mr Hernandez said in an interview with Bloomberg Television's Stephen Engle.

As long as the firm explains research to clients including government officials, he said, "we should be okay".

Setting Conditions

The government respected everyone who collaborated with it and was committed to providing credible policies, data and communication, said Ms Indrawati, 55, who returned for her second stint as Indonesia's finance minister in July last year after spending about six years as a managing director at the World Bank.

"As I said, if we are going to sign a cooperation, it means cooperation," the minister said.

"Cooperation means both sides have to be comfortable and trust each other in this case. To be a good partner and that's what we expect from all our cooperation."

In the days following the crackdown against JPMorgan, Ms Indrawati's ministry ordered primary bond dealers to uphold the nation's interests and maintain relations with the government that are "based on professionalism, integrity and avoiding conflicts of interest".

The move was seen as an attempt to gag critical research as violation of the rule meant underwriters risked losing their dealership licenses.

Ms Indrawati said the government will read any research that is relevant for policy makers.

"We don't have any pretension that we know everything," she said.

"But we also know a lot of data and we also have the analytical works."

South-east Asia's largest economy is working to become a respected country in the world, Indrawati said, adding reputation mattered a lot to Indonesia's officials.

"Indonesia is still an open country," Ms Indrawati said.

"We are committed to credible policies, credible data and credible communications. There is no fake data, no fake news. We just want to be a good economy with a good reputation."

BLOOMBERG