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Nov

04

STABILITY ATTEMPTED THROUGH THE MANDATORY USE OF RUPIAH

In today’s constantly changing economic environment, it would be nearly impossible to find someone who doesn’t know the significance of US President Benjamin Franklin: the face of the USD 100 dollar bill. While USD continues to be the most heavily traded currency throughout the world, Indonesia took a stand.

The Indonesian Central Bank (“BI”) Regulation No 17/3/PBI/2015 regarding the Mandatory use of Rupiah within the territory of Republic of Indonesia (“PBI”) was enacted on 31 March 2015. The main purpose of the PBI enactment was to to improve the constancy of Rupiah’s exchange rate.

Transactions Subjected to PBI

After the enactment of PBI, all transactions conducted within the territory of the Republic of Indonesia must use Rupiah. This is applicable to both cash and non-cash transactions as follows:

  1. transaction for purposes of payment;
  2. The settlement of other obligations that must be fulfilled by using money; and/or
  3. Other financial transactions.

However, Article 4 of the PBI provides exemptions for the following transactions:

    1. Certain transactions within the framework of implementing state revenues and expenditures as follows:
      • Payment of foreign debt;
      • Payment of domestic debt in foreign currency;
      • Purchase of goods from overseas;
      • Capital expenditures from overseas;
      • States revenue from the sales of government bonds in foreign currency; and
      • Other transactions related to the implementation of the state budget
    2. Grants from or to overseas (only applicable if the granter or grantee is located overseas);
    3. Trade transactions as follows:
      1. Export and/or import of goods to or from outside the custom’s territory of the Republic of Indonesia; and/or
      2. Cross border service activities.

Additional activities such as port clearance, transportation, and other supporting business activities for export and/or import of goods to or from outside the customs territory of the Republic of Indonesia must also use Rupiah as currency.

If there’s a foreign element in the agreement related to the transaction, business parties can still agree on the price with foreign currency but only as reference value for the agreement. Business parties, however, must state the applicable exchange rate pursuant to the Foreign Exchange References Rates published by BI (“JISDOR”), and the payments have to be made in Rupiah pursuant to the JISDOR exchange rate.

    1. Local bank savings accounts in foreign currency; or
    2. financing transactions, if the party that provides or receives the financing facility is located overseas. Such transactions will be subject to the regulation on foreign currency transactions between a bank and a foreign party if the grantor of the financial facility is a bank
    3. In certain cases, such as an agreement on a strategic infrastructure project, the use of foreign currency is allowed after obtaining a prior approval from BI and other relevant government institutions.

Moreover, business parties must list the price of goods or services in the Rupiah currency.

Sanctions

So what are the repercussions of using our friend Benjamin Franklin to transact in Indonesia?

According to Article 17 of the PBI, any violation of the mandatory use of Rupiah in non-cash transactions is subject to administrative sanctions as follows:

      1. Written warning;
      2. 1 (one) percent fine of the transaction value, with a maximum fine of Rp 1,000,000,000,000 (one billion Rupiah); or
      3. Ban from participating in any payment transaction.

To make it even more severe, any violation of the mandatory use of Rupiah in cash transactions is considered a criminal offence under Article 33 of the Law No.7 Year 2011 regarding Currency. It is punishable by a maximum 1 (one) year of imprisonment and a fine of Rp200,000,000 (two hundred million Rupiah).

Wow! It’s quite clear that Indonesia is serious about its attempts to safeguard the value of its domestic currency within the world market.

The moral of the story here: DON’T RISK IT! Leave Mr. Franklin for your travels!

more information, please reach us at info@schinderlawfirm.com

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Dear valued Visitor,

Data is a valuable currency in this new world. In the midst of digital transformation, the Indonesian government has taken the final decision to pass the Pelindungan Data Pribadi (PDP) Bill by September 2022. The PDP Law applies to all businesses established in Indonesia and puts the consumer in control. The task of complying with this regulation falls upon businesses.

The PDP Law affects a variety of business operations, including how your sales team prospect and how marketing initiatives are managed. Businesses have had to reassess their business procedures, applications, and forms. Additionally, all businesses that work with personal data should designate a Data Protection Officer (DPO) or data controller to oversee PDP compliance.

In line with this spirit, it gives us great pleasure to announce and share with all our esteemed clients and business associates that Schinder Law Firm is prepared to assist your company to understand the impacts of the Personal Data Protection Law (PDPL) and take the required measures to comply with the law. Our Privacy, Data Protection, and Cybersecurity practice group is a pioneer in providing data privacy law services in Indonesia. Personal data protection services include but are not limited to:

  • Assessing the existing systems, processes, and controls, etc.
  • Providing provide gap assessment on the existing systems, processes, and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDP Law
  • Developing policies, best practices, and procedures
  • Advising on the security of personal data and managing data breaches
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role, and responsibilities of a data protection officer
  • Advising on cross-border transfers of personal data
  • Carrying out data protection impact assessments and data protection audits
  • Recommending other necessary corrective actions in order to comply with the PDP Law
  • Training on the PDP Law tailored to clients’ businesses

We look forward to many more opportunities in the year ahead with your continued support and trust. For consultation, please send us a WhatsApp or Email.

Warmest regards,
Naz Schinder
Managing Partner

Keep Up with the New Law in Indonesia: Personal Data Protection

  • Assessing the existing systems, processes and controls, etc.
  • Providing provide gap assessment on the existing systems, processes and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDPL.
  • Developing policies, best practices and procedures.
  • Advising on security of personal data and managing data breaches.
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role and responsibilities of a data protection officer.
  • Advising on cross-border transfers of personal data.
  • Carrying out data protection impact assessments and data protection audits.
  • Recommending other necessary corrective actions in order to comply with the PDPL.
  • Training on the PDPL tailored to clients’ businesses.
Privacy, Data Protection and Cyber Security
We help our clients to understand the impact of the Personal Data Protection Law (PDPL) on their companies and take the required measures to comply with the law.