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View all search resultsAnalysis: DHE policy revised again, but gains to foreign reserves remain elusive
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A teller holds a quantity of 100 United States dollar bills atop a bundle of 100,000 Indonesian rupiah banknotes on May 15, 2025, at a money changer in Jakarta. ( Antara/Muhammad Adimaja)
T
he national policy on export proceeds (DHE) from natural resources has been revised for a third time after repeated attempts failed to significantly bolster foreign exchange (forex) reserves or deepen onshore foreign currency liquidity. The latest revision relaxes the mandatory rupiah conversion requirement from 100 percent to 50 percent and requires the placement of DHE in Association of State-Owned Banks (Himbara) members. While this is intended to ease pressure on exporters, it raises questions about whether locking DHE onshore can be effective in the long run without undermining export competitiveness.
The third revision to the DHE policy has reached its final stage and is scheduled to take effect on Jan. 1, 2026. The government aims to increase domestic forex liquidity by easing DHE requirements and providing exporters with greater operational flexibility. Under the new framework, exporters are also allowed to invest excess forex in domestically issued foreign currency-denominated government securities (SBN), which are expected to absorb surplus DHE liquidity in the domestic financial system.
Policy challenges became evident early this year following the issuance of Government Regulation (PP) No. 8/2025, the second revision to the DHE policy. Implemented in March 2025, the regulation required non-oil and gas exporters to place DHE in the domestic financial system for 12 months through Indonesia Eximbank (LPEI) or banks involved in the forex market. It also obligated exporters to convert 100 percent of their foreign currency earnings into rupiah. To support compliance, Bank Indonesia (BI) introduced instruments such as BI Foreign Exchange Securities (SVBI) and BI Foreign Exchange Sukuk (SUVBI) to accommodate exporters' DHE placement for up to 12 months.
Although this stricter regulation achieved a compliance rate of around 95 percent, it failed to deliver a meaningful increase in forex reserves, its primary objective. As a result, Indonesia's reserves declined this year from US$156.1 billion in January to US$150.1 billion in November, falling short of the government's ambition to grow its forex reserves by almost US$80 billion this year, followed by more than Us$100 billion in 2026.
At the same time, pressure on the rupiah intensified. The national currency has continued to depreciate since September, prompting the central bank to maintain its policy rate at 4.75 percent this month despite rising inflation since March. On Dec. 17, the rupiah weakened to Rp 16,698 per US dollar, down 1.39 percent from Rp 16,463 per US dollar on Sept. 1.
Despite the eased conversion requirements, several structural issues remain unresolved.
The decision of Finance Minister Purbaya Yudhi Sadewa to mandate exclusive DHE placement in Himbara banks is intended to strengthen oversight of capital flows. However, this approach has drawn criticism for discriminating against private banks, many of which are better equipped to offer hedging instruments and competitive treasury services. In contrast, Himbara banks often provide a narrower range of products and impose higher transaction costs than multinational and private banks.
