The government is drafting a new legal tender bill that will require individuals and businesses to use rupiah when conducting transactions within the country.
The director general for law and legislation at the Human Rights and Justice Ministry, A.A. Oka Mahendra, said that those who refused to use the local currency when conducting transactions within the country would be subject to legal proceedings under the provisions of the bill.
"There will be sanctions and penalties for those who refuse to use the rupiah in Indonesia," Mahendra said during a seminar on the bill on Monday.
He said that the requirement to use rupiah would help strengthen the value of the local unit against other currencies.
"So, if people, including foreigners, wish to conduct transactions in Indonesia, they will have to change their hard currency first into rupiah," Mahendra said.
Bank Indonesia deputy governor Maulana Ibrahim said that the Central Bank Law already required the use of rupiah for transactions conducted within the country, but the new bill would further strengthen this requirement as it provided sanctions and penalties for violators.
Under chapter 23 of the bill, those who refuse to use rupiah will be subject to jail terms of between 1 and 3 years, and fines of between Rp 10 million and 15 million (about US$1,700).
The new bill is currently being discussed by the House of Representatives' Legislation Committee before being forwarded for deliberation to the relevant House commission. The Legislation Committee is currently seeking the views of all concerned, including academics and the business community.
The House said that the new bill, along with five other bills on economic issues, including taxation, customs, investment and labor, were among the top legislative priorities for this year. The government hopes that the speedy enactment of the economics bills will help revive investor interest in Indonesia.
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