Bank Indonesia Regulation No. 24/6/PBI/2022: Policy on the Use of Rupiah in International Activities
General Overview and Purposes
In order to achieve and maintain the stability of the Rupiah value; and stability of the financial system, as well as to prevent and reduce risks in the monetary sector, Bank Indonesia (Indonesian Central Bank) regulates a policy on the use of Rupiah in international activities by enacting Bank Indonesia Regulation No. 24/6/PBI/2022 regarding Policy on the Use of Rupiah in International Activities (“BI Reg 24/6/2022”).
According to BI Reg 24/6/2022, Rupiah can only be used within the Republic of Indonesia’s Territory.¹However, it can be allowed for Rupiah to be used limitedly outside the Republic of Indonesia’s Territory as long as it has a positive impact and benefit for the Indonesian economy by considering the following: ²
conditions, size, and level of openness of the national economy;
conditions, openness, and depth level of the finance market; and
institutional and infrastructure readiness.
The scope of BI Reg 24/6/2022 consists of the provisions regarding (i) use of Rupiah outside the Republic of Indonesia’s Territory (including the carrying Rupiah out of the Republic of Indonesia’s Territory); and (ii) use of Rupiah by Non-Residents³ ⁸ in the Republic of Indonesia’s Territory.⁴
Use of Rupiah Outside the Republic of Indonesia’s Territory
The use of Rupiah outside the Republic of Indonesia’s Territory is prohibited for both Indonesian Residents and Non-Residents, in which its violation can lead to an administrative sanction unless Bank Indonesia provides an exception based on the following considerations:
achieving the policy objectives of using Rupiah in international activities;
benefits for the national economy and financial system stability; and
other considerations.
Use of Rupiah outside of the Republic of Indonesia’s Territory includes use in the form of: (i) physical; (ii) accounts; and/or (iii) digital financial instruments, which are conducted through (i) quotes; (ii) financial transactions; and/or (iii) settlement of financial transactions.⁵
In addition, further provisions regarding the policy on the use of Rupiah outside the Republic of Indonesia’s Territory will be regulated in a Bank Indonesia Regulation.⁶
Use of Rupiah by Non-Residents inside the Republic of Indonesia’s Territory
The use of Rupiah by Non-Residents within the Republic of Indonesia’s Territory must be supported by underlying economic activities, i.e.: ⁷
current transaction activities;
financial transaction activities;
capital transaction activities; and
other underlying transactions determined by the Bank Indonesia.
In this regard, the violation of this obligation will be subject to administrative sanctions.
On the other hand, Bank Indonesia can set restrictions on the use of Rupiah in certain activities by Non-Residents within the Republic of Indonesia’s Territory and its exceptions, based on the following considerations:⁸
achievement of the policy objectives for the use of Rupiah in international activities;
benefits for the national economy and financial system stability; and
other considerations.
Supervision and Coordination
Bank Indonesia supervises the use of Rupiah in international activities, which are carried out through indirect supervision and/or inspection. In addition, Bank Indonesia may also request data, information, and explanation required from the Residents and Non-Residents.
On the other hand, Bank Indonesia may coordinate with authorities, agencies, institutions, and/or other parties in supporting policies on the use of the Rupiah in international activities.
The Republic of Indonesia’s Territory is the entire territory of Indonesia, including ships and airplanes with the flag of the Republic of Indonesia, the Embassy of the Republic of Indonesia, and other representative offices of the Republic of Indonesia abroad.
Article 3 of BI Reg 24/6/2022
Residents are people, legal entities, or other entities that domiciled or planning to be domiciled in Indonesia for at least 1 (one) year, including representatives and diplomatic staff of the Republic of Indonesia abroad. Non-Residents are people, legal entities, or other entities, who are not domiciled in Indonesia or domiciled in Indonesia for less than 1 (one) year, including representatives and diplomatic staff of other countries in Indonesia.
Article 4 of BI Reg 24/6/2022
Article 6-7 of BI Reg 24/6/2022
Article 8 of BI Reg 24/6/2022
Article 9 of BI Reg 24/6/2022
Article 10 of BI Reg 24/6/2022
Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.
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