THE competition among banks in remittance business heats up during Ramazan, when Indonesia’s migrant workers send money back home.

Bank Negara Indonesia (BNI), the fourth-largest bank by assets, hopes its recent partnership with minimarket chain Alfamart in the transfer of the funds attracts more migrant workers to use its remittance services.

“Most of our individual clients are migrant workers living in the Middle East and Malaysia. They account for 92 per cent of our total incoming transaction and Ramazan is the time when they send money back home,” BNI international division deputy general manager Rahmad Hidayat said recently.

At the moment, BNI has 1,800 branches across the country, while Alfamart has around 5,000 outlets. Besides Alfamart, BNI has forged a partnership with state-owned postal firm PT Pos Indonesia, rural banks (BPRs) and regional development banks (BPDs) as paying agents. It is also looking to begin partnerships with state-owned pawn shop PT Pegadaian and private lender Bank Bukopin to broaden its distribution coverage.

Since the beginning of Ramazan, according to Hidayat, the bank has seen a 25 per cent increase in its incoming remittance transaction compared to the previous month.

Hidayat said that as competition got tougher every year, the bank had started to employ locals as its remittance representatives to attract potential customers in regions known as migrant workers’ enclaves, such as Blitar, East Java; Indramayu, West Java; and Lampung.

BNI aims at booking a 30 per cent rise in its remittance business — both incoming and outgoing transfers from individual and corporate clients — by year-end. In 2012, it booked US$74.3 billion in total remittance value and Rp 202.9 billion ($19.77 million) in fee-based income from the business.

According to the National Labour Placement and Protection Agency (BNP2TKI), Indonesia has 6.5 million migrant workers in 142 countries. The majority of them work in Malaysia, Saudi Arabia and Hong Kong.

The World Bank’s latest report on migration and remittance says Indonesia ranked third in Southeast Asia after the Philippines and Vietnam last year in terms of remittance inflows from migrant workers. It received $7.2 billion from the workers last year, 4.1 per cent higher from 2011. The figure was equal to one per cent of its gross domestic product.

Bank Indonesia recorded that in the first quarter this year, Indonesia received $1.85 billion in remittance from migrant workers, up 7.3 per cent from the same period in 2012. The total remittance sent by the migrant workers rose to $7.01 billion in 2012 from $6.73 billion in 2012.

Bank Rakyat Indonesia (BRI) international business division deputy general manager Noroyono said he was certain the bank would be able to post a threefold increase in its remittance business this year. “We have more than 9,200 branches. Most of them are located in rural areas, close to the migrant workers’ hometowns.”

Similar to BNI, BRI — the third-largest bank by assets — has also seen a 30 per cent increase in the incoming remittance since Ramazan started. As of the third week of July, it recorded around 190,000 incoming transactions, dominated by migrant workers in Malaysia, Saudi Arabia, Hong Kong and Taiwan. The transactions are estimated to reach 250,000 by the end of the holy month.

According to BRI’s 2012 annual report, the bank booked Rp 353.41 trillion in total remittance business last year including those sent by corporate clients.

Largest lender Bank Mandiri reported that its incoming remittance had grown by 30 per cent to around 130,000 transactions in Ramazan from the previous month. Mandiri senior vice president for mass banking Riza Zulkifli said Mandiri planned to establish partnerships with retailers and telecommunication firms to cover the growing remittance market. — By arrangement with The Jakarta Post/ANN