By Mark Ford

Indonesia's largest bank by assets looks set to expand into China having recently been issued a permit to operate there.

The permit issued by the China Banking Regulatory Commission is expected to enable Bank Mandiri to generate new levels of letter of credit (L/C) business.

ASEAN trade

Bank Mandiri already writes large amounts of trade finance business with ASEAN countries.

In September, the bank booked 12,554 transactions worth US$2.7 billion in trade activity between Indonesia and other ASEAN countries.

China growth

In comparison, the bank recorded in the same month 1,234 transactions worth US$403 million in trade activity between Indonesia and China.

Most of these transactions were L/C-based, and the bank expects that when it opens a branch in Shanghai, it will be able to write significantly more business through various banking services.

Bank Mandiri reckons that with the new branch it will boost the volume of business it writes for trades between Indonesia and China from US$30 billion this year to US$50 billion in 2011.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.