Bank Indonesia Export-Revenue Rule Effective From Oct. 1

Bank Indonesia’s requirement that companies place export revenue and foreign loan proceeds in domestic banks will help to reduce volatility in the rupiah, Governor Darmin Nasution said in Jakarta today.

The central bank expects the rule will add an average of $29.5 billion of foreign-currency reserves to Indonesia’s banking system each year, Perry Warjiyo, Bank Indonesia’s director of economic research, said today.

“At least we won’t be as dependent on portfolio investment” for foreign exchange, Nasution said. The rule will help Bank Indonesia to stabilize the rupiah, he added.

The central bank will issue the new rule at the end of this month and it will take effect Oct. 1, Nasution said. There will be a sanction-free transition period from Oct. 1 until January for companies to report revenue and proceeds, he said.

Exporters will have to deposit funds generated overseas with domestic banks maximum within six months of the transaction in 2012 and within three months in 2013, Warjiyo said. Companies that receive foreign loans will be required to transfer the funds to domestic lenders by the 10th of the following month, said Nelson Tampubolon, Bank Indonesia’s director of international directorate.

Editors: Andrew Janes, Reinie Booysen