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Bank Indonesia Regulation on the Mandatory Use of Rupiah


Indonesia’s monetary authority, Bank Indonesia, has issued regulation No. 17/3/PBI/2015 on the Requirement to Use Rupiah Within the Territory of the Republic of Indonesia (the “BI Regulation”). The BI Regulation serves as an implementing regulation to Law No. 7 of 2011 on Currency (the “Currency Law”). Bank Indonesia issued the regulation with a view of easing the pressure on the declining rupiah. 

As background, in 2011 the Currency Law was promulgated. One key provision of the Currency Law is the prohibition of a payee to refuse to accept payment denominated in rupiah. As an exception to this, the Currency Law provides an exemption where the underlying agreement stipulates for payment denominated in a non-rupiah currency. The reasonable interpretation of such rule was that parties to a domestic transaction were free to stipulate that payment was to be made in a non-rupiah currency and would not be compelled to accept payment in rupiah where a different currency has been agreed.

The BI Regulation goes one step further in that it illegalises the use of a foreign currency for all transactions taking place within the territory of Indonesia between two parties domiciled in Indonesia, except for those deemed to be exempt by this Regulation or those than BI exempts by application.


Scope of Affected Transactions

The BI Regulation requires every person to use the rupiah in transactions taking place within the territory of the Republic of Indonesia. Every person carries the meaning of natural or legal person.

The transactions covered are:

  1. Every transaction whose purpose is to make payment;
  2. The settlement of other obligations that must be fulfilled using money; and/or
  3. Other financial transactions. 

The requirement to use rupiah applies to cash and cashless transactions.

The ambit of this BI Regulation is sufficiently broad to cover all transactions within Indonesia that involve payment obligations, including sales and purchase, lease, and loans.


Exempt Transactions




Our Notes


Certain transactions in the course of the implementation of state revenue and expenditure


(Art. 4(a) and Art. 6 BI Regulation)

a.      payment of foreign debt;

b.     payment of domestic debt denominated in foreign currency;

c.      purchase of goods from abroad;

d.     purchase of capital from abroad;

e.      state receipt derived from the sale of bonds in foreign currency; and

f.       other transactions in the course of the implementation of the state revenue and expenditure.


For all the above, payment using foreign currency must have been agreed in writing.



Acceptance or disbursement of grant from or to overseas


(Art. 4(b) and Art. 7 BI Regulation)

Foreign currency may only be used if the recipient or grantor is located overseas.


For the above, payment using foreign currency must have been agreed in writing.



International Trade Transactions


(Art. 4(c) and Art. 8 BI Regulation)

a.      Export out of or import into the Indonesian customs zone; and or

b.     International service performed in the following method:

-        Cross border supply; and

-        Consumption abroad.


For all the above, payment using foreign currency must have been agreed in writing.


Note: Value-added activities that take place in Indonesia’s customs zone in the framework of export and import of goods into and out of Indonesia are not categorised as an international trade and must use the rupiah.



Bank savings denominated in foreign currency.

Payment using foreign currency must have been agreed in writing.



International financing transaction.


(Art. 4(d) and Art. 9 BI Regulation)

1.     Only permitted where one of the parties to the financing transaction is domiciled abroad.

2.     Where the financier is an Indonesian bank, the transaction must fulfil rules on foreign exchange transactions between an Indonesian Bank and a foreign party.


For all the above, payment using foreign currency must have been agreed in writing.



Transactions denominated in a foreign currency performed pursuant to the law.


(Art. 5 BI Regulation)

a.      Foreign exchange business activities undertaken by banks pursuant to the Laws that govern banking and sharia banking.

b.     Transactions on securities issued by the Government denominated in foreign currency in primary or secondary market pursuant to the Law governing government bonds and sharia bonds.

c.      Such other transactions denominated in foreign currency pursuant to the Law.


For all the above, payment using foreign currency must have been agreed in writing.



Transactions in money changer.




Carriage of foreign bank notes from and to Indonesia, in accordance with the prevailing laws.




Strategic infrastructure projects.

Needs approval from Bank Indonesia

(the definition of a project is not clearly stipulated, meaning that the individual components of the project may or may not be exempt under a blanket exemption).

We interpret this provision to confer discretion to Bank Indonesia to determine whether an infrastructure project qualifies.


The Prohibition to Reject Rupiah (Article 10 BI Regulation)

Every party is prohibited from rejecting the rupiah in the course of the payment or settlement of an obligation that must be paid in rupiah and/or for other transactions within Indonesian territory.

As an exception to this rule, if the agreement that underlies a qualifying transaction as referred to under Article 4 and 5 of the BI Regulation (transactions No. 1-6 in the above table) stipulates that the payment is to be made in a foreign currency, the payee is not prohibited from rejecting payment in rupiah (i.e. he is not compelled to accept the rupiah).

This entails that if the parties wish to denominate the payment in a foreign currency, this should be stipulated expressly and in writing in the agreement.


Consequences for Non-Compliance (Article 17-20 BI Regulation)

The BI Regulation imposes administrative sanctions in the form of a written warning, a fine (1% of the transaction value up to IDR 1 billion), and a ban from the payment system.

Another consequence to consider is that it is possible to interpret this prohibition to mean “illegal cause” for the purpose of Article 1335 jo. Article 1337 Civil Code. Under Article 1337 Civil Code a cause is deemed illegal where the performance that must be effectuated pursuant to that agreement breaches primary or delegated legislations (irrespective of the intention of the parties). In turn Article 1335 Civil Code provides that an agreement for an illegal cause is void by law.

We have seen this strategy being used to void agreements in situations where it becomes uneconomical for one of the parties to continue with performance with relative success.


Transitional Period and Grandfathering  (Article 21 BI Regulation)

All agreements outside of the qualifying agreement as provided for under Article 10(3) BI Regulation that provide in writing for settlement or obligations in a foreign currency entered into prior to 1 July 2015 will remain in force until expiration (berakhir). 

This grandfathering, however, only applies for agreements whose settlement is on a cashless basis.

Renewal or extension of these agreements is not grandfathered in and would be subject to the provisions of the BI Regulation.

[Last update: 2015-04-20 17:51:28]

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