Indonesia’s new FX lock-up rule could tilt the field – supercharge state banks, squeeze private lenders

[JAKARTA] Indonesia’s latest plan to compel commodity exporters to park foreign-currency earnings exclusively in state-owned banks is raising alarm, with analysts saying the sweeping measure risks being viewed as a “soft capital control”.

The latest measure, which experts say is the clearest shift yet towards a more government-directed management of Indonesia’s foreign exchange (FX) resources, could also have far-reaching consequences for the country’s banking sector, especially its state lenders.

Beginning Jan 1, exporters of commodities such as coal, palm oil and nickel will be required to retain 100 per cent of their export proceeds in state-owned banks for at least one year.