Press Release MEMR on Obligation to Use Rupiah
As mentioned in our recent Newsflash, July 1, 2015, marked the effective date of Bank Indonesia Regulation No. 17/3/PBI/2015 on Mandatory Use of Rupiah within the Territory of the Republic of Indonesia, presenting major implications for a wide range of businesses. To address impacts specific to the mining and energy sector, the Ministry of Energy and Mineral Resources (“MEMR”) and Bank Indonesia have reached an agreement limiting the applicability of the regulation to certain aspects of the sector.
On July 1, 2015, MEMR issued the following press release, which we have translated into English for ease of reference.
For questions concerning the impact of the new obligations on your business, please contact Johannes C. Sahetapy-Engel [email@example.com].
Agreement between the Ministry of Energy and Mineral Resources (MEMR) & Bank of Indonesia (BI) Concerning Regulation on the Obligation to Use Rupiah
WEDNESDAY, JULY 01, 2015 16:33 WIB
MINISTRY OF ENERGY AND MINERAL RESOURCES
OF THE REPUBLIC OF INDONESIA
DATE: JULY 01, 2015
AGREEMENT BETWEEN THE MEMR & BI
CONCERNING REGULATION ON THE OBLIGATION TO USE RUPIAH
As it is known that BI, as the Monetary Authority has issued Bank Indonesia Regulation (PBI) No. 17/3/PBI/2015 on the Obligation to Use Rupiah within the Territory of the Unitary State of the Republic of Indonesia, stipulated on March 31, 2015 and shall be valid as of July 1, 2015.
This BI Regulation was enacted with an objective and spirit to enhance the depth of the Rupiah market in the framework of stabilizing exchange rate, which in the end is expected to encourage the national economy’s stability.
In responding to this matter, we, the MEMR, fully support the Implementation of PBI 17/3/2015 on the Obligation to Use Rupiah within the Territory of the Unitary State of the Republic of Indonesia and will actively contribute in order to achieve the maximum objective for the issuance of this policy.
The MEMR has observed and understood that there are plenty of suggestions and considerations from business actors in various sectors, including Oil and Gas, Electricity, Mining, as well as New and Renewable Energy in relation to this policy.
The suggestions have been communicated and coordinated seriously to BI as the monetary authority. The MEMR and BI have reached an agreement that:
- They shall cooperate to arrange for implementation steps in order that the implementation of this regulation in the energy sector can function well and achieve the maximum objective, as well as to anticipate issues that may arise.
- Understanding the specific characteristics of an Industry in the energy sector will result in the impossibility of the outright implementation of the PBI for aggregate transactions and the necessity to understand profoundly the characteristics of transactions, that may be categorized as follows:
- Category 1: Transactions which are able to directly implement the provisions of the PBI, for example, lease of offices/houses/vehicles, salary payment for Indonesian employees, various support services;
- Category 2: transactions which require time to implement the provisions of the PBI, for example: fuel, import transactions through local agents, long term contracts, multi- currency contracts;
- Category 3: transactions which are fundamentally difficult to fulfill the provisions of the PBI due to various factors, inter alia, the government regulations. For example: salary payment for expatriates, drilling services and lease of ships.
- For transactions in Category 1 above, a transition period for the maximum of 6 (six) months shall be given.
- For transactions in Category 2 above, transactions in fixed term contracts continued to be executed in foreign currencies shall be surveyed with a possibility of amendment.
- For transactions in Category 3, business actors may continue to use foreign currencies.
- The MEMR and BI will form a group with duties in relation to the implementation of this regulation which will facilitate and convince that the business realm has no difficulties and business activities will function normally.
- The MEMR and BI will issue procedures for the implementation of PBI number 17/3/PBI/2015 in the energy sector.
Head of the Public Communications Centre
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- July 1, 2015