16 September 2019 (closed)
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Bank Indonesia has prepared a draft bill on the redenomination of the Indonesian Rupiah (Draft Bill). The Draft Bill is aiming to improve the economic efficiency and to create smoother commercial transactions. The Draft Bill suggests to remove the final 3 digits of the current Rupiah. By removing the final three digits, the use of the Rupiah would be simplified, however the value of the Rupiah would remain the same.
Implementation of the New Indonesian Rupiah
During the redenomination process, where the last three digits from the current Rupiah are removed, both the new and current Rupiah can be used by the public. The classification of the current Rupiah and the new Rupiah is set out in the table below:
|Preexisting Rupiah||New Rupiah
Source: Bisnis Indonesia
Bank Indonesia aims in the draft to complete the redenomination process on January 1, 2020. After that date, all documents and signage (quotations, values of goods, regulations, agreements, financial documents, etc.) must use the value of the new Rupiah.
Circulation Procedures of the New Indonesian Rupiah
The circulation of the new Rupiah will consist of two phases:
- The First Phase (January 1, 2020 – December 31, 2024):
- Bank Indonesia will issue and circulate the physical currency with the sign “new” incorporated onto the body of the money (First New Money).
- The Old Rupiah can still be used as payment method, until its revocation on December 31, 2024
- The Old Rupiah can still be exchanged at Bank Indonesia until December 31, 2034
- The Second Phase (January 1, 2025 – December 31, 2028)
- Bank Indonesia will issue and circulate the physical currency, without the sign “new” incorporated onto be body of the currency
- The First New Money will be valid until its revocation on December 31, 2028
- The First New Money can be exchanged at Bank Indonesia until December 31, 2038
Mandatory Implementation Measures
The Draft Bill requires both businesses and Individuals to adhere to the following obligations:
- Prices of goods and services must mention both the pre-existing and new Rupiah price during the period from June 1, 2019 until January 1, 2023. This obligation does not apply to micro level businesses)
- The value of goods and services must remain the same when converting prices from the old Rupiah price to the new Rupiah price. Value rounding of the new prices is however allowed
- The value of the Rupiah in documents must be adjusted to the new Rupiah value.
Failure to comply with the above obligations may lead to fines up to IDR 200 million (old value) and/or an imprisonment up to three months.
This column is provided by PNB Law Firm Jakarta