August 22, 2014 / 10:06 AM / 3 years ago

Indonesia lawmakers seek to limit foreign ownership in insurers

JAKARTA, Aug 22 (Reuters) - Indonesian lawmakers are looking into the possibility of reducing the stake foreign investors are allowed to hold in local insurers, the latest move towards more nationalistic policies in Southeast Asia’s biggest economy.

Foreign investors are currently allowed to own up to 80 percent of domestic insurance companies.

Harry Azhar Azis, deputy chairman of the parliamentary commission overseeing finance and banking, told Reuters that lawmakers were hoping to pass a draft bill outlining a broad plan to lower the limit by the end of September.

“Foreign companies own the majority of the insurance business in Indonesia,” said Azis. “We are looking to limit the ownership.”

Indonesia’s insurance sector has seen a spate of acquisitions in the past few years as foreign companies seek to capitalise on the low coverage and attractive growth rates.

Japan’s Sumitomo Life Insurance Co and Dai-ichi Life Insurance Co Ltd have bought stakes in Indonesian insurers, while Britain’s Aviva PLC is partnering with Indonesian conglomerate PT Astra International Tbk to sell life insurance products.

Azis said some political parties including Golkar, the country’s second biggest, have proposed a 49 percent ownership cap. It was not clear if any revision to the limit would apply to investors already holding stakes in Indonesian insurers or just to new deals.

Indonesian lawmakers are also considering restricting foreign ownership in plantations and banks, following a wave of nationalist policies in the oil and mining sector imposed by the outgoing government.

The current parliament and government will remain seated until October, when the new administration of President Joko Widodo will take over. Widodo is seen by the markets as a capable administrator who can bring in much-needed reform for business, but he is also under pressure to impose more nationalist policies. (Reporting by Gayatri Suroyo; Writing by Eveline Danubrata; Editing by Miral Fahmy)

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