T

op government officials have confirmed that the plan to omit three zeros from the rupiah will take place as early as 2014. The bill for the practice, commonly known as redenomination, has been placed as one of the Finance Ministry’s top priorities to be discussed with the House of Representatives next year.

If the law is approved, Rp 1,000 (10 US cents) would be Rp 1 but the value would remain the same. By 2014, Indonesians will then have two types of currencies circulating in the market during the redenomination transition period from 2014 to 2018: the original banknotes at present, and the ones with three zeroes omitted.

During the period, the government will oblige shops and businesses to put dual price tags; before and after the redenomination.

“We will slap sanctions on [businesses] that do not place dual price tags,” the Finance Ministry’s director general of treasury, Agus Suprijanto, told reporters at his Jakarta office.

The draft of the bill on redenomination has been forwarded to the House’s legislative body (Baleg) and is slated to be discussed between January and June, he added.

Agus noted that it would take at least eight years for the government to gradually pull the current rupiah banknotes from distribution. “The transition process is quite long since we need to maintain price stability,” he said as quoted by Antara news agency.

The plan to redenominate the rupiah was first proposed by Bank Indonesia (BI), the nation’s central bank, in 2010. BI Governor Darmin Nasution said at that time that redenomination was part of the government’s efforts to comply with regional economic reforms, to coincide with the establishment of the financial integration scheme in the region by 2015, the ASEAN Economic Community.

“Among ASEAN countries with better performing economies, Indonesia is the only country that still has many zeroes in its currency,” BI spokesperson Difi Johansyah told The Jakarta Post over the weekend.

“It’s for national pride as well. When foreigners come into our country and swap their currency into rupiah, they frequently laugh at our rupiah because of the several zeroes that the banknote has,” he said.

Difi added that this time was the perfect moment for Indonesia to go through with redenomination, citing the country’s stable inflation and prudent fiscal management.

Analysts have said that the policy needed to be implemented to simplify accounting systems and to improve calculating efficiency.

The rupiah is currently one of the lowest-priced currency in terms of its exchange rate to the US dollar, as it is currently traded at a rate of around 9,600 against the greenback, alongside Vietnamese dong (20,840 per dollar), Iranian rial (12,240 per dollar), Paraguayan Guarani (4,325 per dollar), among others.

Finance Minister Agus Martowardojo has repeatedly highlighted the importance of enlightening the public on the difference between redenomination and “sanering”.

The Indonesian government conducted sanering as the resolution to the country’s hyperinflation problem in the 1960s, during which the rupiah’s value was reduced alongside with the zeroes that the government scrapped.