The Obligation to Use Rupiah Currency in the Territory of Republic of Indonesia

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In order to uphold rupiah sovereignty while at the same time supporting macroeconomic stability, Bank Indonesia (BI) has stipulated mandatory rules for using the rupiah currency in transactions in the Republic of Indonesia based on Bank Indonesia Regulation (PBI) Number 17/3 / PBI / 2015 ("PBI 17/2015" ) concerning the Mandatory Use of Rupiah in the Territory of the Republic of Indonesia on March 31^st 2015 effective from July 1^st 2015. PBI 17/2015 is an implementation of Law Number 7 Year 2011 concerning Currency ("Law 7/2011" ) and applies to anyone who makes transactions in the territory of the Republic of Indonesia, both residents and non-residents and applies to foreigners who work in Indonesia.
 
Transactions that are required to use the rupiah currency as referred to above include:
1. Any transaction that has a payment purpose;
2. Settlement of other obligations that must be fulfilled through money;
3. The activity of depositing Rupiah in various amounts and types of customer denominations to the Bank.
4. Cash transactions (using banknotes and/ or coins as a means of payment) and non-cash transactions (checks, billet, giro, credit cards, debit cards and electronic money).
 
However, Article 4, Article 5, and Article 14 of PBI 17/2017 provide exemptions for the mandatory use of Rupiah in several transactions, namely exceptions for the following transactions:

1. Certain transactions in the framework of implementing the state revenue and expenditure budget;
2. Receiving or giving a grant from inside or outside the country can only be done by the recipient or the donor of the grant, one of which is domiciled abroad;
3. International trade transactions, which include:
   1. Export and/ or import activities of goods to or from outside the customs territory of the Republic of Indonesia, namely trade in goods between countries or across countries
   2. Service trade activities that exceed the country's territorial borders by (i) cross border supply, namely the activity of providing services from the territory of one country to the territory of another country, such as online purchases (online) or (ii) consumption abroad (consumption abroad), namely the activity of providing services abroad to serve consumers from Indonesia such as Indonesian citizens who study abroad or are hospitalized abroad.
4. Deposits at banks in the form of foreign currencies
5. International financing transactions;
6. Business activities in foreign currencies conducted by banks;
7. Securities transactions issued by the Government in foreign currencies on the primary market and secondary market;
8. Foreign currency exchanges conducted by the operators of foreign exchange business activities are in accordance with statutory regulations;
9. Carrying foreign banknotes into or out of the customs territory of the Republic of Indonesia which is carried out in accordance with statutory regulations.
10. Other transactions in foreign currencies conducted based on laws. 

 
Apart from the obligations and exemptions from the use of Rupiah in Transactions in the Republic of Indonesia, PBI 17/2015 also stipulates that each party is prohibited from refusing to accept Rupiah whose delivery is intended as payment or to settle obligations that must be fulfilled with Rupiah and/ or for other financial transactions in the Territory. The Unitary State of the Republic of Indonesia and requires business actors to include prices for goods and/ or services only in Rupiah.


Penalties for Not Using Rupiah as a Payment Tool
If you continue to pay in a currency other than rupiah, the penalties are in the form of administrative penalties and/ or criminal penalties. Administrative penalties based on Article 18 of PBI 17/2015 are in the form of (i) written warning (ii) obligation to pay 1% (one percent) of the transaction value, with a maximum amount of payment obligations of IDR 1,000,000,000.00 (one billion rupiah ) and/ or (iii) prohibition from participating in payment traffic.
Article 33 paragraph (1) of Law 7/2011 provides that every person who does not use Rupiah in (i) every transaction that has the purpose of payment (ii) settlement of other obligations that must be fulfilled with money; and/ or (iii) other financial transactions, shall be punished with a maximum imprisonment of 1 (one) year and a maximum fine of Rp 200,000,000.00 (two hundred million rupiah).