16/09/2011 (Jakarta Post) - Bank Indonesia’s new rule requiring exporters and debtors to bring their foreign currencies home from overseas goes into effect in October with a three-month transition period, the central bank said.

The new ruling is expected to bring in tens of billions of dollars in export earnings and foreign debts to domestic banks.

Bank Indonesia (BI) deputy governor Hartadi Sarwono said on Wednesday that BI would begin in January sanctioning local exporters and debtors who failed to comply with the new regulation, charging a minimum of Rp 10 million and a maximum of Rp 100 million (US$11,500) per transaction, or 0.5 percent of their overseas funds.

“We require them to enter the domestic [financial system], but we do not require [the funds to stay] for a certain length of time,” he told reporters after a meeting with the House of Representatives. “We do not require a conversion to the rupiah; the forex still belongs to them.”

Therefore, Hartadi added, the central bank would allow exporters and debtors to bring home the funds one day and “exit on the following day” to match export earnings and reported export items.

Exporters have earlier this week voiced demands for favorable terms in the central banks’ rule, as it might disrupt their cash flow and overseas investments. They also expressed concerns that if the regulation was implemented, the rupiah would strengthen and hurt their overall gains, other than difficulties of cashing in dollars here.

Indonesia, the world’s largest exporter of crude palm oil (CPO), coal and tin, has benefitted from a commodity boom this year, seeking to boost export values to a record high of US$200 billion this year.

As an estimated $31.5 billion — $29 billion from export earnings and $2.5 billion from debtors — will flood into Indonesia’s financial system, Hartadi called on the banking industry to increase products and services to ensure that the funds will stay for a long time.

Deputy Trade Minister Mahendra Siregar shared a similar view, urging the central bank to closely assess the impact of the regulation and the conditions to be fulfilled by Indonesia-based banks to implement the proposed rule soon.

The central bank needed to talk with exporters before issuing the regulation, Mahendra said, adding that input was important for gaining differing interests and perspectives to develop a better rule.

Indonesian Employers Association (Apindo) chairman Sofjan Wanandi urged regulators to closely watch the implementation of the new rule. Many exporters rely on overseas banks because of better facilities and lower interest rates than those offered by Indonesian banks, he added.

In Malaysia, export revenue must be stored at domestic banks within six months of export activities and within one year in Thailand and India, but for the latter, forex earnings must be converted into the local currency. In the Philippines, foreign debts and non-export earnings must be converted into pesos.