The Impact of General Agreement on Trade in Services For The Operation Of Foreign Banks In Indonesia

Suryawan, I Gusti Bagus and Bachrie, Syamsul and Ruslam, Achmad and Moenta, Andi Pangerang (2016) The Impact of General Agreement on Trade in Services For The Operation Of Foreign Banks In Indonesia. Journal of Research in Humanities and Social Science, 4 (4). pp. 29-34. ISSN 2321-9467

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Abstract

In Uruguay Round 1994, all participants committed to establish a multilateral framework of principles and rules for trade in services which was assumed as the proliferation of liberalization. It was comprehensively accepted as General Agreement on Trade in Services (GATS) that became inseparable part of World Trade Organization (WTO). They had hoped if GATS that entered into force in January 1, 1995, could remove any restrictions and internal governmental regulations in the area of services whose impact eventually emerged trade harassment. According to GATS, its substantial coverage encompassing bank as a legally binded sector in liberalization of trade in services. Indonesia agreed unanimously to be bound by GATS through promulgating Act 7 of 1994. Hence, the sui generis (specific) regulation of bank sector was revised which gradually allowed the operation of foreign banks in Indonesia. This paper attempts to identify and analyze meticulously what sort of impact arise from liberalization of bank service based on four modes of supplying services under article 1 of GATS encompassing cross-border supply, consumption abroad, commercial presence, and natural persons presence. In order to yield clear and objective explanation, its impact will be divided into positive impact and negative impact which significantly influenced the economic development in Indonesia.

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