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03 July 2015
Bank Indonesia has issued Regulation 17/3/PBI/2015 concerning the mandatory use of the rupiah within the Indonesian territory, which applies to cash transactions as of March 31 2015 and non-cash transactions as of July 1 2015. The regulation implements the Currency Law (7/2011).
Under the regulation, individuals and companies must use the rupiah for all cash and non-cash transactions in Indonesia. The definition of 'transaction' extends to the use of cheques, giro slips, credit cards, debit cards, ATM cards and electronic money, including:
The obligation to use the rupiah does not apply to the following transactions:
Foreign currencies may be also used in transactions that are governed by law, such as:
In addition, activities related to money changing and the carrying of foreign exchange bank notes in and out of Indonesia are also exempt from the regulation.
Parties are prohibited from refusing to accept funds in rupiah for any payment or settlement of obligations that must be made in rupiah, or any other financial transaction in Indonesia. However, parties may refuse to accept rupiah:
The regulation provides that business operators must price-tag goods and services in rupiah only.(2)
Bank Indonesia is authorised to request reports, descriptions and data from any party involved in the use of rupiah and the obligatory rupiah price-tagging of goods and services.
In enforcing the mandatory use of rupiah under the regulation, Bank Indonesia may coordinate and cooperate with other parties, such as law enforcement officers and the competent authorities.
Any person or company that fails to use the rupiah for payment transactions, obligations that must be settled in monetary terms and other financial transactions, or refuses to accept the mandatory use of the rupiah, will be subject to imprisonment of up to one year or a fine of up to Rp200 million, as provided under Article 33 of the Currency Law.
Violations of the mandatory use of the rupiah in non-cash transactions may incur the following administrative penalties:
Failure to meet the rupiah price-tagging obligation will be penalised by written warnings.
In addition to administrative penalties, Bank Indonesia may recommend that the competent authorities take measures within their area of competence, such as revoking licences or suspending offenders' business activities.
Written agreements on payment or settlement in foreign currencies for non-cash transactions (other than exempt agreements) entered into before July 1 2015 remain valid until their expiration. Any extension or amendment to such agreements must comply with the regulation.
There are a number of issues on which the regulation is less clear than might have been hoped, including:
For further information on this topic please contact Agus Ahadi Deradjat at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125) or email (email@example.com). The Ali Budiardjo, Nugroho, Reksodiputro website can be accessed at www.abnrlaw.com.
(1) Under the Q&A document which elaborates on the regulation, 'strategic infrastructure projects' are subject to a letter of reference issued by the relevant ministry or institution.
(2) Under the Q&A document which elaborates on the regulation, the only exception applies to transactions exempted under the regulation.
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Agus Ahadi Deradjat