Indonesia requires Rupiah payment for all transactions made in Indonesia.
This new mandate was released on 31 March 2015 by Bank Indonesia which is the central bank of the Republic of Indonesia. This new rule will be enforced for all domestic transactions from 1 July 2015.
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With this new rule of Rupiah transactions only the Indonesian Government hopes to boost the value of the Indonesian Rupiah (at the time of writing – USD 1 / Rp 13,354).
At this moment there is an estimate of 6 billion US Dollars in foreign currency transactions per year.
Starting from 1 July 2015 all businesses will be required to;
- Quote prices in Indonesian Rupiah.
- Process all transactions in Rupiah (both cash and electronic payments).
Continue here to have a look at the exceptions to this new regulation.
Sanctions for those who do not comply with the new law.
The sanctions for those who refuse to accept or pay cash Rupiah are;
- A maximum one year prison sentence.
- A maximum Rp 200,000,000 penalty.
The sanctions for those who do not use Rupiah for non-cash payments are;
- A written warning.
- A financial penalty of 1% of the transaction up to maximum 1 billion rupiah.
- And/or a ban to continue perform transactions.
These are some translated fragments of these new regulations. Continue here to to see the original Indonesian version of this new regulation.
(1) Each party shall use Rupiah for a transaction carried out in Indonesia.
(2) These transactions include:
a. every transaction that has the purpose of payment;
b. the settlement of other obligations that must be met with money; and / or
c. other financial transactions.
(1) The obligation to use Rupiah for each transaction as referred to in Article 2(1) shall apply to:
a. cash transactions; this includes transactions using banknotes or coins as a payment method.
b. non-cash transactions; this include transactions made with the use of devices for non-cash payments.
To support this new implementation businesses are required to state the price of goods and / or services only in Rupiah.
Article 17 (sanction for refusing cash payments)
For the violation of:
a . the obligation to use Rupiah cash transactions (refer to Article 3, paragraph 1.a); and / or
b . refusing to accept Rupiah as payment,
The sanctions will be as in Article 33 from Law No 7 from the year 2011 on the topic of Currencies.
This article 33 from Law No7/2011 states that the punishment for refusing to pay with Rupiah or accept Rupiah payments can result in a maximum 1 year prison sentence and a maximum Rp 200,000,000 penalty.
Article 18 (sanction for refusing non-cash payments)
(1) Breach of the obligation to use Rupiah for non-cash transactions (refer to Article 3, paragraph 1.b) will result in sanctions such as:
a. a written warning;
b. the obligation to pay a penalty (see below); and / or
c. prohibition to participate in future payment traffic.
(2) The financial penalty referred to in paragraph (1.b) is set at 1% (one percent) of the transaction, with total liabilities to pay at most of 1,000,000,000 (one billion rupiah).
In an interview with Kompas.com, Mr Eko Yulianto, the acting director of money management at Bank Indonesia. explains the following;
“The central bank has the authority to request reports, evidence, and / or data to each of the parties concerning the implementation of the obligation to use Rupiah,” said Eko.
Eko said that when using a foreign currency quote, the exchange rates used tends to favor one party. Eko gave an example of the implementation of this regulation to travel services which often use foreign currency in their price quotes.
“Later on the travel services that list a foreign currency price will undergo inspection as well and their business permit can be revoked,” said Eko.
Some other measurements being take to stabilize the Indonesian Economy are;
- Visa Free entry to 30 extra countries (although when this will actually happen is uncertain).
- New tax allowance decree to encourage local and foreign investment.
- Crack down on corporate tax evasion.
- Tax amnesty in a bid to repatriate the estimated multi-billion US dollars in overseas bank accounts from wealthy Indonesians.
- Lowering taxes to persuade consumers to spend more.
Sources : Peraturan Bank Indonesia Nomor 17/3/PBI/2015 tanggal 31 Maret 2015 tentang Kewajiban Penggunaan Rupiah di Wilayah Negara Kesatuan Republik Indonesia, Undang-Undang Republik Indonesia Nomor 7 Tahun 2011 Tentang Mata Uang and www.bisniskeuangan.kompas.com.