Domestic Transactions that Require the Use of the Indonesian Rupiah:

BI Regulation No. 17/3/PBI/2015 regarding the Mandatory Use of the Rupiah in Indonesia (henceforth BI Regulation No. 17) requires the use of the rupiah in cash and non-cash transactions (for example check, giro order, credit card, debit card, ATM card or electronic money) conducted within the territory of Indonesia. This involves:

Transactions conducted in Indonesia for the purpose of a payment;
Transactions conducted in Indonesia for the settlement of other obligations that must be fulfilled with money; and/or
Other financial transactions conducted in Indonesia.

Exemption from the Mandatory Use of Rupiah Rule

However, Bank Indonesia also exempted specific transactions from the mandatory use of rupiah-rule. These transactions are the same as those transactions that had been exempted under Article 21(2) of the Currency Law (Law No. 7 of 2011). However, BI Regulation No. 17 provides further details on such exempted transactions:

1. Specific transactions that are related to the implementation of Indonesia’s state budget (APBN);
2. Acceptance or provision of grants from/to overseas. Article 7 of BI Regulation No. 17 states that the exemption only applies if the receiver or provider of the grant is domiciled overseas;
3. International trade transactions, which involves:
  - transactions conducted in the context of export and import of goods; and
  - cross-border service (supply and consumption) trade activities (for example online shopping, a call center, or Indonesian patients in hospitals abroad).
4. Foreign exchange savings in banks; and
5. International financing transactions (when either provider or receiver of the financing is domiciled abroad);
6. Business activities conducted in foreign currencies by banks pursuant to the law regulating banking and sharia banking;
7. Transactions using foreign currencies involving commercial (debt) paper issued by the Indonesian government in primary markets or secondary markets pursuant to the law regulating state debentures and state sharia commercial paper; and
8. Other transactions using foreign currencies conducted based on Bank Indonesia Law, the Capital Investment Law, and the Indonesian Export Financing Institutions Law.

BI Regulation No. 17 (Article 16) states that if businesses have trouble implementing the mandatory use of rupiah rule for non-cash transactions, they can request for an exemption at Bank Indonesia.

Contract parties can decide to refuse a payment in rupiah if:

A. The originality of the rupiah received for cash transactions is questioned
B. The payment has been agreed (in writing) to be conducted in a foreign currency. These agreements can only be reached in the context of:
  - transactions exempted above; or
  - strategic infrastructure projects (that have been given approval to use foreign currencies by BI). Such projects involve specific infrastructure projects in which financing originates from an international creditor or from a syndicated loan in which more than 50 percent is contributed by an international creditor. Such infrastructure projects involve transportation (for example airport services, seaport services, or railroad service); roads (for example toll roads and toll bridges); irrigation (for example raw water bearing channel); drinking water; sanitation; telecommunications and information; power; oil & gas; and infrastructure projects that are proven by a statement letter from the relevant ministry or the authorized institution.

Violations of the mandatory use of rupiah for cash or non-cash transactions can result in administrative sanctions (for example a fine of 1 percent of the transaction value, and a maximum fine of IDR 1 billion). Violating the obligation to declare prices of goods and services in the rupiah currency as well as the obligation to provide reports and/or data on the mandatory use of rupiah will result in administrative sanctions in the form of written warnings.