Indonesia to withdraw rupiah from East Timor
Indonesia to withdraw rupiah from East Timor
JAKARTA (JP): Bank Indonesia plans to repatriate rupiah
circulating in East Timor, under a joint operation with the UN
administration in the newly independent state, which recently
decided to use the U.S. dollar as its official currency.
Bank Indonesia deputy governor Miranda Goeltom said that
roughly US$20 million worth of rupiah is still circulating in the
former Indonesian province.
"We hope to withdraw the remaining rupiah from East Timor
within the next six months," she said in a press meeting after
the signing of the repatriation agreement with the UN
Transitional Administration in East Timor (UNTAET).
Signing the deal was the UN Central Payments Office, which is
the current monetary authority in East Timor.
The UN assumed a governing role in East Timor, after locals in
the former province of Indonesia voted for independence in 1999.
Since January 2000, UNTAET introduced the U.S. dollar in East
Timor as its only valid currency, replacing the rupiah and the
Australian dollar which has also gained popularity lately.
Miranda explained that under the deal, UNTAET would collect
rupiah from East Timor through local banks, and send the funds to
Indonesia via Bank Indonesia's office in Denpasar, Bali.
Bank Indonesia will then validate the amount, upon which
UNTAET will inject U.S dollars of an equal value according to
market prices, into banks in East Timor.
"Actually, the repatriation agreement is only to allow UNTAET
to bring rupiah in large amounts into Indonesia, which otherwise
must be done through conventional channels," she said.
Under existing regulations, she said, repatriation of rupiah
of over Rp 10 million requires the central bank's permission.
According to Miranda, much of the rupiah has already been
repatriated through Kupang, East Nusa Tenggara since 1999.
General manager of the UN Central Payment Office Fernando
DePeralto said his office would make direct currency exchanges on
the streets to withdraw the rupiah that is not kept in banks.
"We will provide facilities to exchange the rupiah directly in
a limited amount in each month of the six-month period," he said.
He admitted that the widely dispersed population of East Timor
made it difficult to reach them as most banks were located in
cities.
To overcome this problem, some foreign banks operating there
offer mobile banking services: trucks that drive up to remote
villages to bring the bank services, he explained.
Although UNTAET plans to complete the repatriation within six
months, he added, an extension of the agreement is possible.
He said East Timorese still use the rupiah for their daily
transactions, while Australian businesses there prefer their own
national currency over the U.S. dollar.
"We pay the salaries of civil servants in U.S. dollars ... but
many go out on the streets and exchange the dollar for the
rupiah," DePeralto said.
To make the U.S. dollar more acceptable, UNTAET has brought in
one U.S cent coins worth $10,000 into East Timor.
The administration plans to import $300,000 into the territory
in the near future, with another $500,000 to follow.
DePeralto estimated that between $2 million to $3 million is
already circulating in East Timor.
The rupiah repatriation with UNTAET brings no immediate
benefit to Indonesia other than that it is in line with Bank
Indonesia's regulation to limit offshore rupiah availability.
Miranda added Indonesia would enjoy an improved image from
helping the transition of East Timor's nascent economy.
However, the rupiah repatriation deal also covered issues
concerning assets and liabilities of Indonesian private banks in
East Timor, the possibility of reopening their branches, and the
central bank's assets in the territory. (bkm)