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AT
THE MEETING WITH SINGAPORE
FOREIGN EXCHANGE MARKETS
COMMITTEE MEMBERS AND OTHER
KEY MARKET PARTICIPANTS
SINGAPORE,
FEBRUARY 26, 2001
TOPIC OF
PRESENTATION RECENT BANK
INDONESIA REGULATION ON THE
RESTRICTION OF RUPIAH TRANSACTIONS
AND FOREIGN CURRENCY CREDIT
OFFERED BY BANKS.
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- BACKGROUND OF THE REGULATION
- MAIN OBJECTIVE OF THE
REGULATION
- COVERAGE OF THE REGULATION
- LATEST DEVELOPMENT OF
DOMESTIC FOREX MARKET
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| 1. BACKGROUND
OF THE REGULATION |
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A. SAVING
INVESTMENT GAP
B. UU
NO.24/1999 --> FREE
CAPITAL MOBILITY AND
FREE FLOATING XR SYSTEM
C. BANK INDONESIA'S RESPONSIBILITY
TO MAINTAIN RUPIAH STABILITY
--> INFLATION TARGET
--> UU NO.23/1999
D. IN THIS ENVIRONMENT,
NEED TO REVIEW OUR POLICY
ON THE INTERNATIONALIZATION
OF RUPIAH E. MACRO -
INDICATORS AND XR |
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- POSITIVE
ECONOMIC INDICATORS
IN 2000 : SUCH AS
4.8% GDP GROWTH WITH
MODERATE INFLATION
RATE, 15% NON-OIL
EXPORT INCREASE,
AND SUFFICIENT AMOUNT
OF INTERNATIONAL
RESERVES (USD 30
BIO IN 2000 COMPARED
TO USD 23.7 BIO IN
1998)
- BUT RUPIAH SIGNIFICANTLY
DEPRECIATED(28%)
- RUPIAH WAS MUCH
MORE VOLATILE COMPARED
TO OTHER REGIONAL
CURRENCIES AS INDICATED
IN THE FOLLOWING
GRAPH.
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| 2. MAIN
OBJECTIVE OF THE REGULATION |
| WITH
OUR COMMITMENT TO MAINTAIN
FREE FOREIGN FLOW OF CAPITAL
AND FLOATING XR SYSTEM, THERE
IS A NEED TO REDUCE THE INTERNATIONALIZATION
OF RUPIAH AND FOCUS ON THE
UTILIZATION OF RUPIAH FOR
ECONOMIC ACTIVITIES WITH
UNDERLYING TRANSACTIONS. |
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| 3. COVERAGE
OF THE REGULATION |
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A. PROHIBITS BANK TO EXTEND
LOAN AND OTHER SOURCES
OF RUPIAH FUNDING TO
NON-RESIDENT INCLUDING:
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- DEFINING
IN DETAILED
THE TYPE OF
CREDITS OF
RUPIAH AND
FOREX LOAN
(WHICH WERE
NOT EXPLAINED
CLEARLY IN
THE 1973 BI'S
REGULATION)
INTRADAY OVERDRAFT
TO NONRESIDENT
IS ALSO NOT
ALLOWED BY
THIS REGULATION.
- PLACEMENT
OF RUPIAH IN
THE FORM OF
DEPOSIT OR
OTHER MEANS
TO OFFSHORE
BANKS.
- INVESTMENT
IN RUPIAH DENOMINATED
ASSETS ISSUED
BY NON-RESIDENTS.
- INTER-OFFICE
TRANSACTIONS
OF RUPIAH (DOMESTIC
BRANCH LENDS
TO OFFSHORE
BRANCHES).
- EQUITY PARTICIPATION
IN RUPIAH TO
NONRESIDENT
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B. LIMITS BANK TO CONDUCT
DERIVATIVE TRANSACTION
(FORWARD SELLING) WITHOUT
UNDERLYING TRANSACTION |
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- THIS
IS AN IMPROVEMENT
ON THE LEGAL
STATUS OF THE
EXISTING RULES
WHICH WERE ORIGINALLY
ISSUED IN THE
FORMS OF TELEX
IN AUGUST 1997
AND NOW BE CONVERTED
INTO "BANK
INDONESIA REGULATION",
IN ACCORDANCE
WITH THE CENTRAL
BANK LAW OF 1999.
- THE NEW REGULATION
CLARIFIES DETAILED
SUPPORTING DOCUMENTS
TO PROVE INVESTMENT
TRANSACTIONS.
- THE EXISTING
RULES ARE STILL
EFFECTIVE, EXCEPT
THE TRANSACTION
LIMIT IS ADJUSTED
FROM $5 MILLION
TO $3 MILLION
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C. PROHIBITS BANK TO TRANSFER
RUPIAH TO NONRESIDENT
WITHOUT UNDERLYING ECONOMIC
ACTIVITIES IN INDONESIA
THE RULES OF RUPIAH TRANSFER
ARE THE FOLLOWING : |
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| PARTIES ENGAGED |
POLICY |
EXCEPTION |
| R-->R |
NOT PROHIBITED |
1.1 THE RUPIAH IS RECEIVED THROUGH OFFSHORE BANK |
| NR --> R |
NOT PROHIBITED |
2.1 THE RUPIAH IS RECEIVED THROUGH OFFSHORE BANK IN
CASH OR VIA AN
ACCOUNT WITH OFFSHORE
BANK |
| R --> NR |
PROHIBITED |
3.1 THE SETTLEMENT AT NR'S ACCOUNT WITH ONSHORE BANK
RELATED WITH ECONOMIC
ACTIVITIES IN INDONESIA,
SUCH AS EQUITY
PARTICIPATION,
SECURITIES TRANSACTIONS
INCLUDING SBI,
FOREIGN DEBT REPAYMENT
IN RUPIAH AND DEBT
RESTRUCTURING,
OPENING OF IMPORT
L/C AND LOCAL L/C
IN RUPIAH, GOODS
AND SERVICES PURCHASING
IN INDONESIA, NR'S
LIVING COST IN
INDONESIA.
3.2 THE SETTLEMENT OF FOREX BUYING AGAINST RUPIAH FROM NR BY R THROUGH ONSHORE
BANK IN WHICH THE RUPIAH IS BOOKED ON THE NR'S ACCOUNT WITH ONSHORE BANK |
| NR--> NR |
PROHIBITED |
4.1 THE SETTLEMENT AT NR'S ACCOUNT WITH ONSHORE BANK
RELATED WITH ECONOMIC
ACTIVITIES IN INDONESIA,
SUCH AS EQUITY
PARTICIPATION,
SECURITIES TRANSACTIONS
INCLUDING SBI,
GOODS AND SERVICES
PURCHASING IN INDONESIA,
NR'S LIVING COST
IN INDONESIA.
4.2 THE SETTLEMENT OF FOREX TRANSACTION, WHICH IS DONE THROUGH ONSHORE BANK,
BETWEEN NR IN WHICH BOTH PARTIES USE THEIR FOREIGN CURRENCY AND RUPIAH ACCOUNTS
WITH ONSHORE BANKS FOR THE SETTLEMENT |
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D. OTHER MATTERS
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- BANK CUSTOMERS
ARE REQUESTED
TO PROVIDE APPROPRIATE
DOCUMENTATION
ONLY FOR RUPIAH
TRANSFER TO NON-RESIDENT
EXCEEDING RP.
100 MILLION IN
ORDER TO MINIMIZE
ADMINISTRATIVE
BURDEN OF THE
REGULATION.
- VERIFICATION
OF THE DOCUMENTS
ARE BASICALLY
THE RESPONSIBILITY
OF THE REMITTING
BANK FOR RUPIAH
TRANSFER TO NON-RESIDENT
AND THAT OF THE
RECEIVING (BENEFICIARY)
BANK FOR RUPIAH
TRANSFER TO RESIDENT.
- SUPPORTING
DOCUMENTION FOR
THE RUPIAH TRANSFER
WITH UNDERLYING
INVESTMENT TRANSACTIONS
MUST BE KEPT
BY BANKS FOR
POST-AUDIT PURPOSES
OF BANK INDONESIA.
- TRANSITION
PERIODS ARE GIVEN
TO BANKS ONLY
WITH THE FOLLOWING
CONDITIONS:
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NO ROLL-OVER
OF THE OUTSTANDING
RUPIAH PLACEMENT
AT OFFSHORE BANK
AND RUPIAH SECURITIES
ISSUED BY NON-RESIDENT. |
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-
RUPIAH LENDING
TO OFFSHORE BRANCHES
(INTER-OFFICE
ACCOUNTS) BE
SETTLED WITHIN
ONE MONTH, NO
LATER THAN FEBRUARY
12, 2001. |
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-
OUTSTANDING RUPIAH
EQUITY PARTICIPATION
TO NON-RESIDENT
BE DIVESTED WITHIN
ONE YEAR, NO
LATER THAN JANUARY
12, 2002. |
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-
NO ROLL-OVER
OF THE OUTSTANDING
DERIVATIVE TRANSACTION
THAT MAY EXCEED
THE MAXIMUM AMOUNT
STIPULATED IN
THE REGULATION
(THE DIFFERENCE
BETWEEN THE OLD
LIMIT OF $5 MILLION
AND THE NEW LIMIT
OF $3 MILLION)
FOR NON-UNDERLYING
INVESTMENT TRANSACTION
WITH NON-RESIDENT. |
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-
THE GRACE PERIOD
FOR RUPIAH TRANSFER
TO NON-RESIDENT
ACCOUNT WAS 5
WORKING DAYS
AFTER THE DATE
OF BANK INDONESIA
REGULATION, NO
LATER THAN FEBRUARY
7, 2001. |
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DOCUMENTATIONS
TO PROVE ECONOMIC
ACTIVITIES IN
INDONESIA (FOR
TRANSFER OF RUPIAH
MORE THAN RP
100 MILLION) |
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| PAYMENTS RELATED
TO TRANSACTIONS |
DOCUMENTS |
| EQUITY PARTICIPATION |
· DOCUMENTS OF PURCHASING SHARES
· SHAREHOLDERS MEETING MINUTES FOR DIVIDENDS PAYMENT |
| PURCHASING RUPIAH SECURITIES |
· PURCHASE CONFIRMATION FROM BROKERAGE
· DIVIDEND PAYMENT CONFIRMATION FROM SHARE ISSUER (FOR DIVIDEND PAYMENT)
· COUPON PAYMENT NOTIFICATION FROM BOND ISSUER (FOR COUPON PAYMENT) |
| BANK INDONESIA CERTIFICATE |
· DEPO BILYET |
| OFF-SHORE RUPIAH LOAN, INCLUDING RESTRUCTURED LOAN |
· LOAN AGREEMENT |
| OPENING IMPORT L/C |
· IMPORT DOCUMENTS |
| BUYING AND SELLING OF GOODS AND SERVICES IN INDONESIA |
· INVOICES |
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| 4. LATEST
DEVELOPMENT OF FOREX MARKET |
| A.IMPROVED
ONLINE MONITORING SYSTEM
OF BANK INDONESIA |
| · THE
REGULATION IS EXPECTED TO
ENCOURAGE FOREX TRANSACTIONS
THROUGH DOMESTIC BANKS, INCLUDING
ONSHORE FOREIGN BANKS TO
REPLACE TRANSACTIONS BETWEEN
OFFSHORE BANKS. |
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| B. FOREIGN
BANKS MAY NEED TO ADJUST
THEIR INTERNAL RISK MANAGEMENT
AND TRADING STRATEGIES |
| · SOME
FOREIGN BANKS HAVE MADE PROACTIVE
ACTIONS---BY ADJUSTING THEIR
INTERNAL GUIDELINES ON THE
LIMIT AND MATURITY STRUCTURE
OF FOREX TRANSACTION--- IN
ORDER TO ANTICIPATE POTENTIAL
INCREASE OF FOREX TRANSACTIONS
IN ONSHORE MARKET. |
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