President Joko Widodo’s (Jokowi) plan to revise the export proceeds foreign exchange policy is said to have received a positive response from market players, with capital flows increasing into Indonesia.
“In fact, the rupiah has strengthened,” said Coordinating Minister for the Economy Airlangga Hartarto at the Presidential Palace, Jakarta on Monday, 16th January 2023.
In the revised policy contained in government regulation number 1 of 2019, the government will regulate foreign exchange more strictly. Exporters are required to put US dollars in the country within a certain period of time.
“In all countries, it is like that,” he added.
The rupiah exchange rate continued to strengthen in Monday’s trading. The US dollar is now sitting below Rp15,000.
Inflows of foreign capital increased into the market for government bonds or SBN to Asian countries, especially Indonesia. Based on data from the Directorate General of Risk Management and Financing, on 1st-10th January there was a capital inflow of up to Rp12 trillion.
One of the revisions, according to Hartarto on 11th January, is the regulation on the length of time foreign exchange is parked in the country. In accordance with Jokowi’s directives, there were several new sectors on the list that must place cash in the country.
The current government regulation states that each resident can freely own and use foreign exchange. However, specifically for foreign exchange in the form of export proceeds for natural resources, it must be included in the Indonesian financial system.
Export proceeds for natural resources mean to have originated from the results of export goods in a. mining; b. plantations; c. forestry; and d. fisheries; reads article 3 paragraph (2) of the government regulation.
The obligation of exporters to include export proceeds for natural resources into the Indonesian financial system must be through special export proceeds for natural resources account at a bank conducting business activities in foreign exchange. The placement must be carried out no later than the end of the third month after the month of registration of the export customs notification.
“Right now, only the mining, plantation, and forestry, and fisheries sectors are required to have proceeds enter the country. We also include several sectors, including manufacturing. We do revisions so that the increase in exports and the surplus in the trade balance is in line with the increase in foreign exchange,” he explained.
Hartarto ensured that the regulation will also cover the length of time foreign exchange is parked in the country.
“How much foreign exchange is in which sector, then how long has he been parked in the country,” concluded Hartarto.