Govt drafts new bill to monitor forex transfers

JAKARTA (JP): The government plans to strictly monitor the flow of foreign exchange by requiring all transfers of capital in and out of the country to be reported, according to a new draft law.

The Foreign Exchange Traffic and Exchange Rate System Bill, a copy of which was obtained by The Jakarta Post, will be submitted by the government to the House of Representatives for deliberation early next month, a source said.

The bill stipulates that every "person or legal body within the region of Indonesia is required to inform banks or other parties appointed by Bank Indonesia about the transfer or moving of a certain amount of foreign currency or rupiah to or from the country."

The bill does not give a figure for the minimum amount of money transferred that should be reported to the government.

The "moving" of capital means the act of bringing either the foreign currency or rupiah, in cash, into or out of the country.

Each report should cite the amount of the transfer, the type of foreign currency, the purpose of the transfer and the source of the revenue, names of receiving and sending parties, and the countries of origin and destination of the money.

The appointed banks or related parties must report to the central bank immediately.

The bill also stipulates that the government will determine the system of exchange rate to be applied after consulting with Bank Indonesia.

The government will choose between the fixed, free or managed floating exchange rate systems, according to an explanation of the draft law.

The central bank will be responsible for the implementation of the exchange rate system.

At the dawn of the monetary crisis in mid 1997, the government free floated the rupiah's exchange rate after decades of a controlled floating currency, a move said by many to have further damaged the economy.

If passed, the bill would replace the current 1964 foreign exchange law.

Since 1970, Indonesia has applied a free foreign exchange system, which allows every person or legal body to freely own, transfer or use foreign currency in transactions. (das)