TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Foreign exchange export proceeds to boost the economy
The accumulation of implementation of regulations and incentives from BI will encourage an increase in the quantity of foreign exchange and guarantee the liquidity of the US dollar in the country.
Change Size
Pile it high: Containers are loaded at Tanjung Priok Port in North Jakarta on Dec. 18, 2018. Bank Indonesia has asked exporters to keep their foreign exchange earnings at home in order to beef up the country’s reserves and maintain the rupiah’s stability. (Antara/Sigid Kurniawan)
I
ndonesia is a country heavily reliant on exports to boost its economy. As a result, foreign exchange export proceeds play a significant role in maintaining the country's balance of payments and supporting its currency value. When Indonesian businesses engage in international trade and export goods or services, they earn foreign currency, which needs to be repatriated back to the country.
Foreign exchange export proceeds are crucial for Indonesia for several reasons. First, they contribute to the country's foreign reserves, which are essential for stabilizing the rupiah and defending against potential currency fluctuations. Secondly, these export earnings support the growth of domestic industries, create job opportunities and stimulate economic development.
Historically, Indonesia had regulations in place regarding the repatriation of foreign exchange export proceeds. Exporters were required to convert a percentage of their earnings into rupiah within a specific timeframe.
This policy aimed to ensure sufficient supply of rupiah in the domestic market and maintain the currency's stability. However, these regulations were not without criticism, as some argued they hindered businesses from fully benefiting from their export earnings and led to capital flight.
In recent years, the government has introduced new regulations related to foreign exchange export proceeds to address the challenges posed by the previous policies and improve the country's economic environment. While the specifics of these regulations may vary, some potential impacts could be as follows.
First, the new regulations aim to make it more attractive for exporters to bring their foreign exchange earnings back to Indonesia. By offering incentives or easing repatriation requirements, the government hopes to encourage exporters to comply willingly.
Second, if the new regulations succeed in increasing the repatriation of foreign exchange proceeds, they could bolster Indonesia's foreign reserves. This would provide a more robust defense against currency volatility and improve overall economic stability.
