BI sets range for forex exchange report

JAKARTA (JP): Bank Indonesia (BI) deputy governor Achjar Iljas said on Wednesday the minimum amount of foreign exchange transactions required to be reported under the newly enacted foreign exchange monitoring law would be between US$5,000 and $10,000.

He said the exact amount awaiting the conclusion of an intensive evaluation by the central bank.

"We are trying to find an amount level which is just significant enough economically, but not too low as to operationally burden the institutions who will do the reporting," he said.

The foreign exchange monitoring law, enacted in May this year, and attendant regulations require banks and nonbank financial institutions in the country to report foreign exchange transactions to the central bank starting next April.

Achjar said BI was talking with a number of banks to discuss an appropriate minimum amount level for reporting forex transactions.

He said a level which was too low would burden banks and other reporting institutions with administrative work because of the high volume of transactions.

BI has until April to evaluate and determine the reasonable minimum amount, Achjar said.

"We are now studying the past forex transaction statistics. We put a series of hypothetical numbers as the minimum amount and will see what the volume of the forex transaction report would turn out to be."

Achjar said the forex monitoring system would mainly provide the central bank with more accurate and timely statistical data for the country's balance of payments and the flow of capital records.

"All these data are used as the basis for BI to make decisions, particularly on the monetary and banking sector," he said.

In implementing the forex monitoring law, BI issued Regulation No. 1/9/1999 on Oct. 28

Banks and nonbank financial institutions must report the amount and type of transactions, the purpose of transactions, who ordered the transaction, the name of the counter parties and the countries where the counter parties are located.

Bank and nonbank financial institutions must also report rupiah transactions with non-Indonesian residents.

Achjar said institutions failing to comply with the ruling would risk incurring penalties. He stressed that BI did not expect to issue the penalties and hoped all parties would report their forex transactions voluntarily.

According to the ruling, a delay in the reporting is liable to a penalty of Rp 5 million per day for banks and Rp 1 million per day for nonbank financial institutions.

Banks which do not report their forex transactions risk a penalty of Rp 100 million, and Rp 20 million for nonfinancial institutions, plus a penalty for each day of the delay.

Achjar said BI would not publish individual reports of forex transactions because they were confidential.

"But an aggregate amount of transactions for all transaction groups were not confidential and thus will be published by BI regularly," he said.

The ruling also stipulates that banks which do not report correct or complete information will be sanctioned with a penalty of Rp 100 million, and Rp 20 million for nonbank financial institutions.

The ruling says that a bank which fails to report its forex transactions for six consecutive periods or a maximum of six months would risk having its license suspended by the central bank.

It also stipulates that if a similar omission is committed by a nonbank financial institution, Bank Indonesia will recommend its closure.

Another BI deputy governor, Miranda Goeltom, said previously that the forex transaction reporting system would not discourage foreign investors from entering the country because it would lessen Indonesia's risk as the monetary and banking policy design would be better.

"In the past the risk was higher because investors perceived that we didn't have good data for policy design," she said. (udi)