On 31 March 2015, Bank Indonesia (“BI”) issued Regulation No. 17/3/PBI/2015 on Mandatory Use of Rupiah within the Territory of the Republic of Indonesia (“PBI 17/2015”). PBI 17/2015 requires the mandatory use of Rupiah in cash or non cash transactions conducted in Indonesia.
- transactions related to the implementation of the State budget;
- receipt or grant of offshore grants;
- international commercial transactions (such as export – import of goods and services);
- bank deposits in foreign currency;
- international financing transactions;
- transactions in foreign currency conducted based on prevailing laws and regulations (such as any business in foreign currency conducted by banks; transactions in the primary and secondary market on securities issued by the government in foreign currency).
Exemptions for Agreements
- agreements relating to transactions exempted from the mandatory use of Rupiah as referred to inPBI 17/2015; or
- agreements for “Strategic Infrastructure Projects” that have obtained approvals from BI.
Strategic Infrastructure Projects” include transportation infrastructures (including airport services, port services, and railways facilities and infrastructures), roads, irrigations, drinking water infrastructures, sanitation infrastructures, telecommunication and information infrastructures, power infrastructures, and oil and gas infrastructures, funded by offshore borrowings from bilateral and multilateral agencies(e.g. IFC, JBIC, JICA, ADB, IDB) (or if the borrowing is in the form of a syndicated loan, the contribution of these agencies exceeds 50%). In this case, statement letters from the relevant ministries or government agencies must be obtained for these projects (stating that the projects are indeed strategic infrastructure projects).
Other written agreements on non – cash payments or settlement of obligations in foreign currency made before 1 July 2015 will still be valid until the expiry of those agreements. No exemptions are applicable for extensions or amendments of these agreements.
Further Provisions and Effectiveness of PBI 17/2015
- Further provisions on the detailed implementation of PBI 17/2015 will be set out in a BI circular letter.
- The regulation is effective from 31 March 2015. However, the mandatory use of Rupiah for non – cash transactions will only become effective from 1 July 2015.
- Any failure to make price quotations in Rupiah, or any failure to submit any report/information/data requested by BI with respect to compliance with this new regulation, will be subject to administrative sanctions in the form of warning letters.
- BI can also make a recommendation to the relevant authorities that they take any necessary actions with respect to the non – compliance (including a recommendation to revoke the relevant business license or to stop the business activities of the relevant business entities).