Darmin irked by oil firms with dollars stashed abroad
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Bickering between Bank Indonesia and some oil and gas companies has returned to the public domain when the bank’s governor revealed that some firms refuse to deposit their dollars in domestic banks.
Bank Indonesia governor Darmin Nasution believes the refusal is partially responsible for the
declining supply of US dollars in the local market.
Currently, many petrochemical giants operating here stash their dollar-based export proceeds in overseas banks and, when ordered to move their earnings to Indonesia, some of them were “disgruntled”, according to Darmin.
He said that some companies told him that they “don’t like to be treated this way” on the issue of dollar repatriation.
The short dollar supply in the foreign exchange (forex) market contributed to the rapid depreciation and high volatility of the rupiah in 2012, analysts have said.
In 2012, the rupiah was Asia’s worst-performing currency, having depreciated as much as 5.9 percent throughout the year.
Oil and gas companies have been in the spotlight since Finance Minister Agus Martowardojo blamed them for the “thin” supply of dollars in the local forex market.
The minister told the companies to repatriate their dollars, urging them to “work together to safeguard the national economy”.
Darmin said that some of the businesses rejected the suggestion.
“Several companies are refusing. They argue that it goes against their contracts,” the central bank governor said. “I ask them, which clause was violated?”
In 2011, Darmin issued Central Bank Regulation (PBI) No. 13 requiring exporters and debtors to bring back to Indonesia-based banks funds parked overseas. Foreign-based oil companies claim that the regulation overlaps another law.
“PBI 13 does not apply to PSC [production-sharing contract] holders, who are governed by Oil and Gas Law No. 22,” Dony Indrawan, spokesperson for PT Chevron Pacific Indonesia, the biggest player in the sector, said last week without specifying details.
In its latest push, the central bank introduced PBI no. 14 in November allowing some banks to apply for so-called trust rights, a legal framework for banks to manage dollar-based funds. It is a follow-up to PBI no. 13 on export proceeds
PBI no. 14 was expected to bring home all funds stashed overseas, generating billions of dollars in forex liquidity and easing pressure on the rupiah. BI estimates that total dollar-based export proceeds in Indonesia stand at US$28-$34 billion annually.
Executives from state-owned lenders, Bank Mandiri (BMRI) and Bank Negara Indonesia (BBNI) have confirmed applying for trust rights.
According to central bank data, 11 oil and gas companies have deposited their export earnings with foreign banks — eight in New York and three in Singapore — due to the lack of a clear regulatory framework on the management of dollar-based funds in Indonesia. (sat)
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