Why Indonesia Is Exempting China, Australia, Canada from Export Forex Rule
Why Indonesia Is Exempting China, Australia, Canada from Export Forex Rule
Jakarta. Strategic economic ties, bilateral agreements, and foreign investment are the main reasons Indonesia plans to exempt four countries from its foreign exchange retention rule for natural resource exporters, Finance Minister Purbaya Yudhi Sadewa said on Thursday.
The countries are the United States, China, Australia, and Canada, although Chief of Economic Affairs Minister Airlangga Hartarto is expected to formally announce the official list.
“The first consideration is that we have bilateral or multilateral agreements with them. The second is that they have made significant investments here,” Purbaya said at the Presidential Palace in Jakarta.
He added that the presence of banks from those countries operating in Indonesia was another factor behind the government’s decision to grant the exemptions.
Purbaya stressed that the foreign exchange retention policy is primarily aimed at Indonesian companies that earn substantial export revenues from natural resources but keep those proceeds in overseas banks.
“The main target is domestic companies that earn large export revenues but place the money in banks abroad. That is the primary target. It is not intended for foreign companies operating here,” he said.
He added that the policy is not designed to target foreign companies making direct investments in Indonesia, referring to firms with foreign ownership exceeding 10%.
The foreign exchange retention policy, introduced under Government Regulation No. 21/2026, requires exporters to retain a portion of their natural resource export proceeds in Indonesia to strengthen domestic foreign currency liquidity.
Under the regulation, oil and gas exporters must retain at least 30% of their export proceeds onshore for a minimum of three months, while non-oil and gas exporters are required to retain 100% for at least 12 months.
The funds must be placed in special accounts at government-designated banks. The regulation also limits exporters to converting no more than 50% of their retained foreign exchange into rupiah, down from the previous allowance of 100%.
The government expects the policy to strengthen Indonesia’s foreign exchange reserves, support rupiah stability, and improve domestic foreign currency liquidity without disrupting export activity.
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