logo-ahplogo-ahplogo-ahplogo-ahp
  • Home
  • Firm
    • About Us
    • Careers
    • Linked Stream
  • Solutions
      • Anticorruption & Good Corporate Governance
      • Banking & Finance
      • Capital Markets
      • Competition Law
      • Debt & Corporate Restructuring
      • Dispute Resolution
      • Energy, Oil & Gas
      • Foreign Direct Investment
      • Fraud & Forensics Investigation
      • Intellectual Property
      • Islamic Finance
      • Labor Law
      • Mergers & Acquisitions
      • Projects & Natural Resources
      • Real Property
      • Shipping & Aviation
      • Tax & Customs Services
      • Telecommunications & Media
  • Members
  • Events
    • News & Insights
  • Rajah Tann Asia
✕
            No results See all results

            Bank Indonesia Clarifies New Rupiah-Use Requirements

            Bank Indonesia (“BI”) recently issued a circular (the “Circular”) to further explain the scope and ambit of BI Regulation No. 17/3/PBI/2015 on the obligation to use rupiah in payment transactions conducted within the territory of Indonesia (the “Regulation”).  While most of the contents of the Circular (which came into effect on 1 June 2015), merely reiterate the provisions of the Regulation, it does contain some additional useful information.

            1. Dual Quotation

            The Circular makes it clear that BI is determined to enforce a prohibition on dual price quotations, meaning that in most cases prices may only be quoted in Rupiah. Besides the obvious example of a price tag attached to a particular good that is offered for sale, other examples given in the Circular include prohibitions on the dual quotation of prices/fees in respect of:

            1. the services provided by agents (such as the fees charged by real estate agents, consultants and travel agents – this latter category has been particularly vocal in its opposition to the rupiah-use requirement given that they have to pay overseas-based airlines, and accommodation and other service providers, in United States dollars;
            2. apartment, home, office, building, warehouse, and vehicle leasing rentals;
            3. port charges and airline ticket prices / freight charges;
            4. restaurant prices;
            5. price clauses in contracts;
            6. offer, order and billing documents, including invoices, delivery orders and purchase orders; and/or
            7. proofs of payment, such as receipts.

            The Circular also stresses that the prohibition of dual quotation applies equally to goods and services sold via the Internet.

            2. Strategic Infrastructure  Projects

            The Circular puts some meat on the bones of the exemption contained in the Regulation for strategic infrastructure projects. These are now spelled out as including infrastructure projects in the following sectors: (1) transportation, including airports, ports and railways; (2) highways; (3) irrigation and drinking water; (4) sanitation; (5) information and communications technology; (6) power; and (7) oil and gas.
            In order for a particular project in the above sectors to be exempted, a two-stage process must be gone through whereby the project must:

            1. be certified as being a strategic infrastructure project by central or local government, as evidenced by a certificate from relevant government ministry/agency;
            2. secure approval for exemption from Bank Indonesia based on a written application by the party concerned, or should the project be undertaken by a consortium, a written application from one of the consortium members on behalf of the entire consortium.

            The exemption may be extended to cover not only transactions conducted as part of the project’s development up until completion, but also the sale of products or services produced by the project for a designated period of time, provided that this was envisaged from the outset.

            BI is required to approve or reject an exemption request within a period of 30 days from the date of receipt of all the required application documents. Should it not be possible to arrive at a determination within 30 days, BI must inform the applicant of this. Given that the approval process may exceed 30 days, there appears to be no strict limit on the amount of time that may be taken by BI in making a decision.

            3. Non-Cash Transactions by Parties with Special Characteristics

            Should the rupiah-use requirement for non-cash transactions present special difficulties for particular types of businesses, BI has the discretion to apply special policies based on a consideration of whether the requirement will (i) require such businesses to make fundamental changes to their business systems and/or processes; (ii) endanger the survival of such businesses should a sufficient transitional period not be applied; (iii) adversely affect investment where businesses require foreign currency-denominated financing for a particular period and an obligation to quickly shift to rupiah use would disrupt such investment; and/or (iv) adversely affect businesses that have a significant influence on national economic growth.

            In addition to considering factors such as the above, BI will also take into account the level of compliance of a business with BI regulations, including compliance with their obligations as regards forex earnings from exports and the application of prudential principles in relation to offshore borrowing by non-bank corporations.

            4. Role of Banks

            Banks are required to inform customers that intend to conduct foreign currency-denominated transactions of the obligation to use Rupiah within Indonesian territory. Should a customer persist with the intention of using foreign currency, the customer must be requested to state the purpose of the transaction on the transaction form or slip.

            5. Transitional Provisions

            The Circular further elaborates the transitional provisions of the Regulation by providing that grandfathering applies to master or derivative agreements and other transaction documents, such as purchase and delivery orders, executed prior to 1 July 2015. Should a derivative or other form of agreement necessary for the implementation of the main agreement be treated as a stand-alone agreement, then it will not be grandfathered and must comply with the requirements of the Regulation if it is executed after 1 July 2015. Similarly, agreements that are extended or amended subsequent to this date must also comply with the Rupiah-use requirements, with the term “amended” covering changes in the parties, the price of the goods/services, and / or the subject matter of the agreement.

            ________________________________________
            (i).   Peraturan BI No. 17/3/PBI/2015 tentang kewajiban Penggunaan Rupiah di Wilayah Negara Kesatuan Republik Indonesia.

            ***

            AHP Client Alert is a publication of Assegaf Hamzah & Partners. It brings an overview of selected Indonesian laws and regulations to the attention of clients but is not intended to be viewed or relied upon as legal advice. Clients should seek advice of qualified Indonesian legal practitioners with respect to the precise effect of the laws and regulations referred to in AHP Client Alert. Whilst care has been taken in the preparation of  AHP  Client Alert, no warranty is given as to the accuracy of the information it contains and no liability is accepted for any statement, opinion, error or omission.

            Download

            More Articles

            • OJK Announced Guidelines to Implement Offerings Classified as Non-Public Offerings
              February 7, 2023
            • Regional Trade Highlights 2022
              January 30, 2023
            • Indonesia Expands Its Anti-Tax-Avoidance Measures: A Development to be Aware of in Tax Planning and Compliance
              January 27, 2023
            • Dissecting the Amendment to the Omnibus Law: Which Sectors are Affected and How?
              January 20, 2023
            • A New Rule Requires Importers of Software or Other Digital Products via Electronic Transmission to Fulfil Customs Obligations
              January 16, 2023
            • Rajah & Tann Asia Member Firms, Members of Lifesciences Asia-Pacific Network (LAN), Contribute to the Singapore and Indonesia Chapters of Comparative Study: Patent Linkage Systems in APAC
              January 13, 2023
            • Indonesia’s New Criminal Code Introduces Corporate Crime
              January 4, 2023
            • A Practical Guide to Getting Your Organisation PDP Law-Ready
              December 1, 2022
            • Shipping Law Updates
              November 16, 2022
            • Arb-Med-Arb: An Effort to Enhance Amicable Dispute Resolution
              September 30, 2022
            By Practice Area
            • Projects & Energy
            • Technology Media & Telecommunications
            • Intellectual Property
            • Real Property
            • Banking & Finance
            • Capital Markets
            • Competition
            • Mergers & Acquisitions
            • Dispute Resolution
            • Tax and Customs

            Jakarta Office

            Capital Place, Level 36 & 37
            Jalan Jenderal Gatot Subroto Kav. 18
            Jakarta 12710,
            Indonesia

            Phone: +62 21 2555 7800
            Fax: +62 21 2555 7899
            Email: info@ahp.id


            Subcribe

            Surabaya Office

            Pakuwon Center, Superblok Tunjungan City
            Lantai 11, Unit 08
            Jalan Embong Malang No. 1, 3, 5,
            Surabaya 60261
            Indonesia

            Phone: +62 31 5116 4550
            Fax: +62 31 5116 4560

            Assegaf Hamzah & Partners


            © 2001 - 2022 Assegaf Hamzah & Partners. All rights reserved.

            Rajah & Tann Asia is a network of legal practices based in Asia.

            Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client.

            This website is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this website.