The Obligation of the use of Indonesian Rupiah in the Territory of the Republic of Indonesia
25 May 2016
Party to apply this regulation is a party who is classified in the category of: individual; corporate (group of people/legal entity/non legal entity).
Furthermore, cash and non-cash transactions are the type of finance transaction in which the party is obliged to use Indonesian Rupiah. Such transaction shall include the following conditions:
transaction that has the purpose of payment;
settlement of other obligations that shall be filled with money; and/or other financial transactions.
There are several exceptions on the obligation of the use of Indonesian Rupiah in finance transaction, thus making the obligation not applicable to transactions such as:
Certain transactions within the framework of the implementation of the state revenues and expenditures budget (described in Article 6):
(a) the payment of foreign debt;
(b) the payment of domestic debt in foreign currency;
(c) spending on goods from abroad;
(d) capital expenditures from abroad;
(e) revenues derived from the sale of state bonds in foreign currency;
(f) any other transaction in the framework of the implementation of the state revenues and
The acceptance or the grant from/or to abroad
This can only be done by the grantee or the grantor, one of which is domiciled abroad.
International trade transactions
Transaction that falls within this category is export or import of goods into or from the outside of the territory of the Republic of Indonesia.
Bank saving in foreign currency
This saving can only be made by bank conducting business in the form of deposit or withdrawal of foreign currency.
International funding transactions
Transactions can only be carried out by the receiver or giver of the funding, one of which is domiciled abroad. For example, foreign exchange transactions conducted between Bank and foreign party. In this case, the Bank shall be subject to the provisions stated on foreign exchange transactions.
Moreover, exceptions on the obligation of the use of Indonesian Rupiah on other foreign exchange
transactions are also specified which include:
business activity in foreign currency performed by the Bank under regulations governing commercial banking and Islamic banking; transaction of negotiable paper issued by the Government in foreign currency in the primary market and secondary market under regulations governing letter of state indebtedness and Shari’a state negotiable paper; and Other transactions in foreign currencies carried based on the regulation.
Prohibition and Other Liabilities
The concerned party is prohibited to decline Indonesian Rupiah in which its function is being intended as a means of payment in financial transactions. However, these provisions shall be excluded if:
- there is doubt on the authenticity of Indonesian Rupiah;
- there is a written agreement concerning the payment in foreign currency.
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