BI to introduce penalty for forex monitoring
BI to introduce penalty for forex monitoring
JAKARTA (JP): Bankers and businessmen who do not report their
foreign exchange transfers into or out of the country will face
jail terms, a senior official at Bank Indonesia said here on
Monday.
The central bank director, Achjar Iljas, said on Monday that a
provision on the penalty would be inserted in the bill on capital
monitoring to be debated by the House of Representatives in
April.
He said the penalty for those failing to provide appropriate
information on the transaction of foreign currencies above a set
amount would risk both imprisonment and fines.
"The result of the capital monitoring is expected to be much
better with the penalty system," he told reporters on the
sidelines of a debate session on a new central bank law between
the government and the House's commission VIII on finance and the
state budget.
The monitoring system was expected to be effective before
June, he said.
Achjar stressed that introducing a penalty in the forex
monitoring system was not a form of capital control.
"It will be a market-friendly measure," he said.
He explained that Indonesia would retain its open foreign
exchange policy because the country was still a net importer of
capital due to the large savings-investment gap.
"But we need information to be able to come up with an
appropriate policy response," he said.
Achjar said the capital monitoring system would provide the
government and the central bank with a database that could be
used to design reliable fiscal and monetary policies.
He said the capital monitoring bill stipulated that all
foreign currency and rupiah transfers of particular amounts must
be reported to Bank Indonesia through banks or other institutions
appointed by the central bank.
The central bank has yet to decide the lower limit for
transactions to need reporting.
Achjar said there were plans to introduce a new computerized
system to link the central bank other banks to enable the
monitoring system to be effective and efficient.
"We have started a pilot project on several large banks," he
said, adding that the computer system must also be compatible
among the banking population.
"So whatever happens it will be immediately recorded," he
said.
The country suffered a massive capital outflow in the wake of
the August 1997 rupiah flotation, which caused the local currency
to tumble by more than 75 percent in value against the U.S.
dollar.
Some members of the Cabinet considered following Malaysia's
adoption of a foreign exchange control system in September,
including introducing an exit tax on outbound capital transfers.
The idea irked the International Monetary Fund, which is
providing a multibillion dollar bailout package for Indonesia.
The government later agreed with to introduce a capital
monitoring system while maintaining the open capital account
policy.
In the latest letter of intent sent to the IMF, the government
said the central bank was making progress toward establishing the
monitoring system with the technical assistance from the IMF.
"A consultant from the statistics department of the IMF is to
provide further technical assistance over the next three months,
and the monitoring system is expected to be in place by June
1999," it said.
Asked to comment on the possibility of introducing a tax
system as part of the monitoring mechanism, Achjar indicated that
it could be an option. (rei)