Monday, June 30, 2014

Currency Law Violation is Common in Seaports

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Fathan Qorib/Robert Sidauruk                                                                                      Indonesian Version

Despite a requirement under  the 2011 Currency Law  (Law No. 7 of 2011on Currency, the “Currency Law”) that rupiah must be used in Indonesian territory, foreign currency continues to be widely used especially in Indonesian seaports. This practice is readily apparent at Jakarta’s Tanjung priok port, where the US Dollar is used not only for export-import transactions, but also for purchases of domestic gas, property, and several port service charges, just to mention a few.

Mr. Mirza Adityaswara, Deputy Governor of Bank Indonesia emphasized that “Everyone must comply with the Currency Law,” which provides in Article 21 of that all transactions in Indonesia must be settled by using rupiah, both for payments in cash and non-cash. However, he acknowledged that some businesses still use US dollars particularly at seaports even though the transactions are not for export-import.

 “BI and the Government will continue to disseminate information on the mandatory use of rupiah as mandated by the Currency Law, as violations can result in criminal sanctions,” added Mr. Adityaswara.

Previously, Chairul Tanjung, the new Coordinating Minister for Economic Affairs request that all transactions at Tanjung Priok port uses rupiah, as it is required under the Currency Law. Mr. Tanjung further said that over the next three months the Government will continually inform businesses operating in Tanjung Priok port of the mandatory use of rupiah.

“We have requested PT Pelindo II to instruct all businesses (ed: in Tanjung Priok port) to implement the Currency Law,” said Mr. Tanjung.

Mr. Tanjung believes that  businesses using US dollars for certain transactions at Tanjung Priok port is reasonable. However, he emphasized that the Currency Law must be implemented as there are criminal sanctions for non-compliance.
“The international trading system applies at ports, for which the US dollar is required for payment, but the Currency Law requires all transactions to use rupiah with any violations will subject to criminal sanctions,” added Mr. Tanjung.

Responding to the instruction, Director of PT Pelindo II, RJ Lino said that his institution does not have a problem in using rupiah for all transactions in Tanjung Priok port, in fact the use of rupiah in Indonesian ports has increased in the past few years.
According to Mr. Lino, PT Pelindo II’s income reached IDR 7.5 trillion in 2013, of which 65% was transacted in rupiah. This is a significant increase from 2009, where only 40% was received in rupiah currency.

“Now, only 35% of transactions use US dollars due to the strong domestic revenue,” informed Mr. Lino.
To support the Government’s efforts, Mr. Lino said he is committed with the mandatory use of rupiah and will encourage all businesses to use rupiah for every transaction made in port areas. However, the port service charges will still be stated in US dollars, but with payment accepted in rupiah.

He concluded his comments by saying “Business will be informed of the charges in US dollars, but payment will be accepted in rupiah, we’ll also inform the exchange rate when payments are made,”.

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