Problems relating to Trade and Investment on Indonesia
13. Finance |
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Issue |
Issue details |
Requests |
Reference |
| (1) Negative Impact upon the Trustee Borrowing Scheme by the Compulsory Receipt of Foreign Currency through Domestic Banks | - BI Regulation compulsion of receipt at BI of export proceeds and external borrowing is a matter of concern, lest it gives negative impact on the existing and future financial schemes (trustee borrowing scheme, employing foreign banks). | - Observance of BI Regulation necessitates agreement on understandings for avoidance of problems on repayment of borrowings from the overseas lenders. | - BI Regulation No. 14/5/PBI/2012 of June 8, 2012 (Amendment to BI Regulation No. 13 /2011 |
| (Action) - GOI has taken measures compelling enterprises, effective from 2 January 2012, to receive all foreign currency received from export or external borrowing via foreign exchange banks located in Indonesia. |
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| (2) Indefinite Application of Offshore Loan Control | - On 28 October 2014, BI promulgated "new regulation on foreign currency offshore loan". While this regulation mandates the exchange hedge based on the established calculation formula, it is uncertain if it applies to a company with its financial statement in US dollars. (USD F/S company). Where USD F/S company makes external borrowing in USD, no exchange hedge requirement should be applied to such companies, since no exchange risk can arise. | - It is requested that GOI excludes application of this regulation to companies with financial statement in US dollars. | - BI Regulation No. 16/21/PBI/ 2014 of 29 December 2014 Concerning the Implementation of Prudential Principles in Managing External Debt of the Non-Bank Corporation |
| (3) Abrupt Application of Foreign Currency Borrowing Control | - Bank Indonesia notification of 29 December 2014 on the non-bank corporation's external debt requires foreign exchange hedge in conducting purchase and sales business denominated in foreign currencies. Since 2016, external credit rating is required in executing debt denominated in foreign currencies. - While BI has restricted external debt denominated in foreign currencies since this year, a sudden change arisen has made it difficult for each corporation to respond. Moreover, BI's compulsion of risk hedge by the domestic banks in Indonesia, and acquisition of external credit rating are considered quite burdensome to certain corporations. |
- It is requested that BI repeals or deregulates the BI requirements set forth in the left column. - It is requested that BI reconsiders the restrictions. |
- Reg.16/20/Pbi/2014 (Old) => 16/21/Pbi/2014 (New) - BI Notification |
| (4) Restricted Cross Border Financing Among Group Companies | - BI does not allow cross border financing, in local currency, among group companies, disabling effective lending and borrowing of funds among group companies. While such transactions are possible if in USD, it requires advance consultation with and reporting to BI. | - It is requested that BI deregulates restrictions and liberalises funding transactions. | - BI |
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