BI to launch forex transfer system this month
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)