On Wednesday, a top government official in Indonesia said that they are planning on introducing a requirement for the country’s exporters.
They would have to keep their foreign exchange earnings for three months in the local banking industry. The plan is under discussion between the government and the Indonesian central bank.
The announcement
Arilangga Hartarto, the minister for economic affairs, said that they were also doing a review of the export earnings requirements and it was almost complete.
Earlier this month, he had said that Indonesia had been contemplating making a revision to a regulation introduced in 2019.
According to the said regulation, exporters of natural resources had to keep their earnings at domestic banks in a special account.
He went on to say that there was a possibility of the revision adding a minimum holding period and they could also expand it for covering exporters who are part of the manufacturing sector.
On Wednesday, the Indonesian Exporters Association’s chairman, Benny Soetrisno, said that they would not have a problem with the policy.
But, he did add that it was on the condition that this was applicable in the event that the US dollars supply was enough to purchase production equipment and raw materials.
He said that the currency is not converted into rupiah.
More incentives
Meanwhile, Perry Warjiyo, the Governor of the Bank of Indonesia (BI), also said on Wednesday separately that the central bank had some suggestions.
He said they would share them with the finance minister and Airlangga, as they were about offering more tax incentives to exporters for their special savings.
Talking to a forum with bankers, he said that they had already given incentives and now they had to figure out a way of making them more attractive.
FX issues
The governor said that US dollar liquidity had been tight globally and this had prompted Indonesian exporters to keep their earnings for two seconds in local banks before shifting them offshore.
He said that the reason for FX term deposits was because of lower domestic interest rates. Warjiyo shed some light on the BI’s plans of introducing a new monetary policy instrument.
The purpose of doing so would be to provide better returns to exporters for their domestic FX deposits. He had previously stated that the instrument would be introduced in the coming month.
The new instrument of the BI would help the appointed banks in passing on the deposits of the exporters to the central bank and exporters would be paid a competitive rate for the US dollar to them.
A fee would also be paid to the banks and he said that the term deposits could be for a tenure of anywhere between one and three months.
Indonesia is a prominent commodity exporter and its shipments had climbed to a record high in the previous year at about $291.98 billion.
This was because of a surge in global prices of its commodities, such as palm oil and coal, due to the Russia and Ukraine war.
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