Skip to content
Subscriber Only

Indonesia Risks Own Goal as Rupiah-Only Rule Lifts Company Costs

For Indonesian drug maker PT Kalbe Farma, a ban on using currencies other than the rupiah for local transactions is coming at the worst possible time.

Bank Indonesia will prohibit an estimated $12 billion a day of such trades between domestic parties from July 1. Kalbe Farma pays local suppliers in dollars for many raw materials and the rule will push up procurement expenses by 0.5 percent to 1 percent, said Director Vidjongtius. It will also have to rely on more expensive rupiah loans for working capital, boosting its cost of funds by 5 percent to 6 percent, he said.