BI to launch forex transfer system this month
JAKARTA (JP): Bank Indonesia deputy governor Miranda S. Goeltom said on Thursday that a new central bank regulation will be introduced to set the minimum amount of foreign exchange that would be subject to compulsory reporting.
"It will be introduced in one or two weeks time," she told reporters on the sidelines of a seminar.
"But don't interpret this wrongly. It is only aimed for the purpose of data management and foreign exchange monitoring," she added.
Miranda declined to specify the minimum amount of foreign exchange transfer that would be subject to compulsory reporting.
A source at the central bank said Bank Indonesia has yet to set a minimum amount.
"We're still discussing it," he told The Jakarta Post.
He added that although the central bank has introduced the ruling, more time was needed for the full implementation of the system.
The House of Representatives passed a bill in April that empowers Bank Indonesia to monitor the flow of foreign currency exchange, by requiring all transfers of capital in and out of the country to be reported.
The forex monitoring system is deemed necessary to help avoid a currency crisis, such as the one that hit the country in August 1997.
The law on forex flow stipulates that every person or legal entity within the country is required to inform banks, or other parties appointed by Bank Indonesia, about the transfer or flow of foreign currency or rupiah to or from the country when it is above a certain amount.
The minimum transfer amount to require reporting would be set by a central bank regulation.
Several Bank Indonesia officials have said that deciding on the minimum amount is a challenge, pointing out that if the minimum amount is set too low it would be cumbersome, but if it is set too high many transactions would not be reported.
"At the initial stage, the reporting system would be paper- based, so if the minimum amount is set too low the paperwork will be huge," said one official.
Meanwhile, the source at the central bank said that making a decision about the minimum amount had become more challenging as several key economic ministers were trying to interfere.
"This will be a test case for Bank Indonesia's newly acquired independence," the source said.
Meanwhile, Miranda reaffirmed at the seminar that Indonesia would not adopt a fixed exchange rate system for the rupiah, due to a lack of foreign currency reserves and huge overseas debt level.
"The burden of overseas debt is so heavy and the amount of forex reserves is relatively small," Miranda said.
Bank Indonesia's net foreign exchange reserves stood at around US$16.2 billion, while the country's total foreign debt exceeds $150 billion.
Several economists, including those from opposition parties, had called on the need to fix the exchange rate of the rupiah to the U.S. dollar in order to stabilize the local currency.
Indonesia abandoned its managed floating rate system in August 1997 and adopted a free float system in the wake of the currency crisis that started in Thailand.
The rupiah plunged to its lowest level of Rp 17,000 to the dollar last year, compared to Rp 2,400 before the crisis started. (rei)