Monitoring the free forex regime

A very free foreign exchange system had evidently contributed to the prolonged economic hardship in Indonesia. Institutions or people were free to bring with them money into or out of the country whenever they wanted. The flow of foreign exchange was uncontrollable before 1999.

At that time, the central bank Bank Indonesia (BI) did not know exactly the total amount of Indonesia's corporate debts.

Bank Indonesia issued a regulation asking every bank and every financial institution to present a report on their foreign exchange transactions worth more than US$ 10,000. The decision was made to monitor the flow of foreign exchange.

The central bank has also asked state and private enterprises with a monthly turnover of more than Rp 100 billion to present a report on their foreign exchange transaction worth more than US$10,000 starting June 1.

It would be the best way for BI to control the monetary sector. BI's success in implementing the policy highly depends on its marketing of the policy or lobbying with concerned agencies.

-- Bisnis Indonesia, Jakarta