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Indonesia releases new rules on export revenue repatriation for resources
[JAKARTA] Indonesia has issued new rules requiring exporters of natural resources to receive earnings in the local banking industry, which was among new measures Jakarta announced last year to support the then falling rupiah currency.
The rupiah hit its weakest since the 1998 Asian financial crisis in October 2018 due to capital outflows linked to rising US interest rates, the US-China trade war and a widening of Indonesia's current account deficit.
It has regained some ground this month thanks to improving investor appetite for risky assets, though gaps in Jakarta's merchandise trade and current account remain wide.
The details of the new regulation, which was signed by President Joko Widodo earlier this month and was made public this week, were similar to what ministers had revealed in November.
Export revenues from the shipment of resources from the mining, plantation, forestry or fishery sectors must be kept in a special banking account, whether in foreign currency or converted into rupiah, effective immediately, according to the regulation.
Exporters are allowed to take funds out to pay for imports, taxes, debts or dividends as long as they provide a supporting document to prove that the transaction is real.
If they don't comply, authorities could fine, bar them from exporting or even revoke their business permit.
Indonesia has required exporters to receive earnings through onshore banks since 2012. Central bank data shows while 90 per cent of such earnings already flow through local banks, only 15 per cent of these funds are converted to rupiah.
Other measures authorities have taken to put a floor under the currency include raising interest rates, raising import taxes, delaying infrastructure projects and widening biodiesel use.