Although there are no strict foreign exchange controls currently in place in Indonesia, the Indonesian government has issued several regulations on the monitoring of foreign exchange traffic and places certain restrictions on the holding of Rupiah by nonresidents. This monitoring measure mainly comes in the form of reports on the foreign exchange flow in and out of Indonesia. The latest foreign exchange reporting requirement was issued by Bank Indonesia in 2003, which is an implementation to Law Number 24 of 1999 concerning Foreign Exchange Flow and Exchange Rate System.
These monitoring measures allow Bank Indonesia to keep track of foreign exchange flows between residents and non residents, including the movement of foreign financial assets and foreign financial liability between residents.
Under the latest regulation, the obligation to report applies to the following companies:
· the company which conducts business activity other than (i) banking business and (ii) non-banking financial institution;
· the company that has a total asset of at least Rp 100 billion or has a turn over of at least Rp 100 billion; and
· the company that conducts an activity of foreign exchange flow, which activity is not conducted through local banking or non-banking financial institution.
The reports, submitted to Bank Indonesia, include:
· report on the transactions which affect foreign financial asset and/or liability; and
· report on the position of foreign financial asset and/or foreign financial liability at the end of reporting period.
The sanctions for not complying with the reporting obligations to Bank Indonesia include fines or revocation of the business license.
Indonesia has also recently established an Anti-Money Laundering Agency (“PPATK”) with broad powers of investigation and prosecution to prevent international money laundering activities.