Penalty eyed for rupiah physical transfer abroad<\/p>\n
JAKARTA (JP): Bank Indonesia Governor Syahril Sabirin said on
\nMonday that the government was proposing a penalty system for
\nthe physical transfer of rupiah banknotes out of and into the
\ncountry in a bid to curb overseas counterfeiting of the rupiah
\nand speculation on the currency.<\/p>\n
He said that the physical transfer of more than Rp 5 million
\n(about US$585) would be subject to penalty.<\/p>\n
The measure would be included in the central bank bill
\ncurrently being debated in the House of Representatives.<\/p>\n
"This is not a capital control because you are still free to
\ntransfer any amount of money (nonphysically)," he told reporters
\non the sidelines of a legislative debate on the central bank
\nbill.<\/p>\n
He said that the new measure was aimed at curbing the rampant
\ncounterfeiting of the rupiah and preventing overseas speculation
\non the rupiah.<\/p>\n
He declined to provide further details because the proposal
\nwas still being discussed with other government officials.<\/p>\n
Syahril said that the new measure would become effective when
\nthe House passed the new central bank bill into law, which is
\nexpected to occur later this month.<\/p>\n
Under existing laws, physical transfers of more than Rp 5
\nmillion must be reported, but no penalties are imposed.<\/p>\n
The House earlier passed a new law on the country's foreign
\nexchange system which states that the transfer of a certain
\namount of rupiah and foreign exchange must be reported to the
\ncentral bank through commercial banks and financial institutions
\nappointed by Bank Indonesia.<\/p>\n
The ruling was meant to monitor the flow of short-term capital
\nin order to prevent the current financial crisis from recurring
\nin the future.<\/p>\n
The government will issue a decree stipulating the limit of
\ntransferred funds which must be reported.<\/p>\n
The proposed penalty aims to stop counterfeiting of the
\nrupiah, which has been rampant since the economic crisis began in
\nAugust 1997.<\/p>\n
A Bank Indonesia official said in December last year that the
\nauthorities had seized Rp 5.96 billion in counterfeit rupiah or
\nabout 0.012 percent of the nearly Rp 50 trillion in circulation
\nduring the first nine months of 1998. This represented the
\nhighest amount of counterfeit money recorded by the central bank.<\/p>\n
The new measure also seeks to stem the sort of massive outflow
\nof the rupiah which was seen during the onset of the financial
\ncrisis, including the overseas transfer of rupiah following the
\noutbreak of bloody riots and unrest in May last year. There are
\nfears that such violence could reoccur during the upcoming
\nelections.<\/p>\n
There is also a belief that rupiah which is transferred
\noverseas, particularly to Singapore, is used for speculative
\ntransactions against the U.S. dollar. Such speculation makes it
\nmore difficult for authorities to stabilize the local currency.<\/p>\n
The rupiah has been trading at around Rp 9,000 against the
\ndollar over the past few months, compared to Rp 2,450 in July
\n1997 when the economic crisis first hit the country. (rei)<\/p>",
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