21 Jun 2022
Bank Indonesia Moves to Boost Rupiah Use in International Transactions
With the Rupiah coming under some pressure again vis-à-vis the United States Dollar, the central bank, Bank Indonesia (“BI”), has issued a new regulation to discourage the use of foreign currencies and promote the use of Rupiah in international trade.
The new regulation, PBI No. 24/6/2022 on the Use of Rupiah in International Activities (“PBI 24”), entered into force on 27 April 2022 .
While PBI 24 does not require the mandatory use of Rupiah in international trade, it encourages it where this would have a positive impact on the Indonesian economy.
The key features of PBI 24 are as follows:
A. Use of Rupiah Outside Indonesia
PBI 24 reaffirms the existing prohibition on the offshore use of Rupiah. However, the regulation further provides that BI may introduce exemptions to such prohibition, one of which is for the settlement of bilateral transactions. In deciding whether to grant an exemption, BI should to take the following matters into consideration (“Considerations”):
The offshore use of Rupiah may take the form of:
As regards the parameters for offshore Rupiah use, PBI 24 provides that the national currency may be used for making quotations, conducting financial transactions, and/or for the settlement of financial transactions.
B. Use of Rupiah by Non-Residents Within Indonesia
Under PBI 24, a “Non-Resident” means an individual, legal entity or other entity that is not domiciled in Indonesia, or is resident in Indonesia for less than 1 year, including foreign diplomatic representatives and staff in Indonesia. Persons and entities in these categories may only use the Rupiah within Indonesia for the purposes of an underlying economic activity that is acceptable under the Regulation. Any violation of this provision is subject to administrative sanctions.
Acceptable underlying economic activities under PBI 24 comprise:
In certain circumstances, BI may impose further restrictions and exceptions relating to the use of Rupiah by Non-Residents within Indonesia, subject to the Considerations stated in section A above. These restrictions and exceptions relate to the types of credit and/or financing activities that are described in Articles 15 and 16 of PBI No. 18/19/PBI/2016 on Rupiah Foreign Exchange Transactions between Banks and Foreign Parties. In this regard, PBI 24 makes it clear once again that the Rupiah may not be used by Non-Residents within Indonesia for credit and/or financing purposes -- in other words, it is prohibited for Non-Residents to be provided with credit or loans that are denominated in Rupiah.
The issuance of PBI 24 is welcome as it serves to clarify and further strengthen a number of pre-existing monetary policy regulations on the use of Rupiah both within and outside Indonesia. Clearly, Bank Indonesia hopes that the new regulation will remedy a number of weaknesses in the earlier regulations and thus help boost the use of Rupiah in international transactions and therefore support the domestic economy. As the regulation is relatively new, however, the way in which it will be applied in practice still needs to be spelled out in detail by further BI implementing regulations.
This ABNR News and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.
 Peraturan Bank Indonesia No. 24/6/PBI/2022 Tahun 2022 tentang Kebijakan Penggunaan Rupiah Pada Kegiatan Internasional issued on 27 April 2022.
Peraturan Bank Indonesia Nomor 18/19/Pbi/2016 tentang Transaksi Valuta Asing terhadap Rupiah antara Bank Dengan Pihak Asing
 These are: (i) PBI 3/3/PBI/2001, as last amended by PBI 18/19/PBI/2016 on Rupiah Foreign Exchange Transactions between Banks and Foreign Parties (Peraturan Bank Indonesia No. 3/3/PBI/2001 tentang Pembatasan Transaksi Rupiah dan Pemberian Kredit Valuta Asing Oleh Bank, as last amended by Peraturan Bank Indonesia No. 18/19/PBI/2016 tentang Transaksi Valuta Asing Terhadap Rupiah Antara Bank Dengan Pihak Asing), (ii) PBI 4/8/PBI/2002 on Requirements and Procedures for Bringing Rupiah Out of or Into Indonesian Customs Territory (Peraturan Bank Indonesia No. 4/8/PBI/2002 tentang Persyaratan dan Tata Cara Membawa Uang Rupiah Keluar Atau Masuk Wilayah Pabean Republik Indonesia), (iii) PBI 19/11/PBI/2017, as last amended by PBI 23/9/PBI/2021 on Amendments to PBI 22/12/PBI/2020 on Settlement of Bilateral Transactions Using Local Currency via Banks (Peraturan Bank Indonesia No. 19/11/PBI/2017 tentang Penyelesaian Transaksi Perdagangan Bilateral Menggunakan Mata Uang Lokal Melalui Bank, as last amended by Peraturan Bank Indonesia No. 23/9/PBI/PBI/2021 tentang Perubahan Atas Peraturan Bank Indonesia No. 22/12/PBI/2020 Tentang Penyelesaian Transaksi Menggunakan Mata Uang Lokal Melalui Bank), and (iv) PBI 20/10/PBI/2018 on Domestic Non-Deliverable Forward Transactions (Peraturan Bank Indonesia No. 20/10/PBI/2018 tentang Transaksi Domestic Non-Deliverable Forward)