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GENERAL OVERVIEW OF INDONESIA CURRENCY LAW – Undang-Undang Mata Uang Indonesia (Rupiah)

07 Jun

On 31 May 2011, The House of Representatives (“DPR“) has passed the Bill on Currency into a law (the “Law“). The passage of the Law in essence serves to implement Article 23B of the 1945 Constitution fourth Amendments (“Constitution”). Article 23B of the Constitution stipulates that currency types and value shall be provisioned by a regulation of a level of a law.

Up until the passage of the Law, Indonesia had no law on currency, where the philosophy of the Law Lies the objective to advance the welfare of Indonesian citizens, to which it aims to promote Rupiah currency usage in economic activities not just at the national level but also at the international level.

Pursuant to Article 2 (2) of the Law stipulates existence of two types of Rupiah:

banknotes and coins. Furthermore, the Rupiah currency is symbolized by “Rp”, in which Article 3(2) provision that ‘one rupiah’ is equivalent to ‘one hundred cent’.

Pursuant to Article 5 (1) of the Currency Law, every Rupiah banknote should, at least, contain:

  1. the state symbol of “Garuda Pancasila“;
  2. the phrase “Negara Kesatuan Republik Indonesia” (Unitary State of the Republic of Indonesia);
  3. a denomination in numbers and letters;
  4. signature of the government and Central Bank;
  5. a serial number denomination;
  6. a text “By the grace of God Almighty”, the Unitary State of the Republic of Indonesia issues Rupiah as an official payment instrument with the value of…); and
  7. Year of issuance and printing Management of Rupiah is regulated under Article 11. It covers the planning, printing, issuing, distributing, revocation and withdrawal, and extermination of the Rupiah currency.

The planning, printing, and extermination of Rupiah will be conducted by Bank Indonesia in coordination with the government. However, Bank Indonesia remains the only institution authorized to issue, to distribute, to revoke, and to withdraw from circulation of the Rupiah currency.

Pursuant to Article 21 (1) of the Law, Rupiah has to be used in:

  1. Payment transactions;
  2. Obligation settlements which uses money;
  3. Other transaction that takes place in Indonesian jurisdiction.

However, Article 21 (2) provision exception for several transactions, such as:

  1. Certain transactions related to state budget;
  2. Income and grants, from and to foreign countries;
  3. International trade transactions;
  4. Foreign currency savings in a bank; and
  5. International funding transactions

 Under article 23 of the Law stated that:

  1. Any person is prohibited from refusing to accept Rupiah the amount the delivery of which is intended as payment or to settle the obligation that must be met with the amount and/or to other financial transactions in the territory of the Republic of Indonesia.
  2. However, the prohibition as mention above is excluded for payment or settlement liabilities in foreign currency that has been agreed in writing berofe.

 Pursuant to article 23 of the Law, any person how violate the obligations to using Rupiah will be sentenced by following sanction:

  1. Any person who does not use Rupiah in (a) every transaction that has the purpose of payment (b) settlement of other obligations to be fulfilled with money, or (c) other financial transactions as referred to in Article 21 paragraph (1) shall be punished by imprisonment sentence at the latest 1 (one) year and a maximum fine of Rp200.000.000 (two hundred million rupiahs).
  2. Any person prohibited to refusing to accept Rupiah that intended as a payment or to settle the obligation that in Republic of Indonesia territory, but because there are doubts over the authenticity amount referred to in Article 23 shall be punished by imprisonment sentence at the latest 1 (one) year and a maximum fine of Rp.200,000,000. (two hundred million rupiahs).

The Law consist of 12 Chapters and 48 Articles, where it repeals and replaces Article 2, 19, 20, 21, 22, and 23 of Law No. 23 of 1999 on Bank Indonesia as amended by the Law No. 6 of 2009. In accordance with Law No. 10 of 2004 on the Formation of Laws and Regulations, the date of enactment will be within 30 days of the Law’s passage, or when signed by the President, whichever is the earliest. At that time the Law will be assigned a number.


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1 Comment

Posted by on June 7, 2011 in Others, Uncategorized, Update News

 

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One response to “GENERAL OVERVIEW OF INDONESIA CURRENCY LAW – Undang-Undang Mata Uang Indonesia (Rupiah)

  1. Pendekar212

    September 22, 2011 at 9:40 am

    If we refer to the Academic Manuscript of the Currency Law, it is stated that the spirit of the Currency Law will be limited to the use of common money (uang kartal) in a cash transaction, while the non-cash transaction should be regulated under separate law which regulates a payment flow (lalulintas pembayaran) (Page 18 and 23 of the Academic Manuscript).
    Mr. Achsanul Qosasi (Vice Chairman of Commission XI of the House of the Representatives) through its opinion delivered during the seminar held on 14 July 2011 stated that the Currency Law applies both for the cash and non-cash transaction (Uang Kartal & Giral).
    For additional information, the Currency Law was initiated by the Commission XI of the House of the Representatives, thus Mr. Achsanul Qosasi is believed to be the person who has the best understanding on the spirit of the Currency Law during such seminar.
    several sources stated theirs opinion in regarding the Article 21 and 23 of the Currency Law has been a main concern by many commercial practitioners in Indonesia. One of the statements that can be highlighted regarding this restriction is being delivered by the House of Representatives during the Currency Law seminar. It is stated that the main spirit of the Currency Law is to protect the sovereignty of Rupiah in Indonesia. By that intention, they opined that any transaction that takes place in Indonesia, other than those being exempted by Article 21 Paragraph (2) of the Currency Law, shall use Rupiah. The transactions mentioned includes cash and non-cash transaction, and which conducted by domestic and/or foreign entity. In terms of international transaction, the exemption provided by Article 21 Paragraph (2) only applies for direct international transaction. International transaction which involves a local representatives/agency from a foreign entity will not be deemed as an international transaction.
    Furthermore the House of Representatives also explained that the application of an agreement on the utilization of a foreign currency as being mentioned by Article 23 Paragraph (2) of the Currency Law will not be treated as an additional exemption of Article 21. In this matter of fact, Article 23 will be used as an additional procedure for the implementation of Article 21. In other words, any on-shore transaction other than being exempted by Article 21 Paragraph (2) could not utilize a foreign exchange even though it is being agreed among the parties. Conversely, Article 23 Paragraph (2) means that the exemption as mentioned in Article 21 Paragraph (2) must be accompanied by a written agreement to be able to utilize a foreign exchange in the transaction. The type of agreement that can be used as an exemption as referred to by Article 23 Paragraph (2) will be further regulated on the implementing regulation of the Currency Law.

     

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