Foreword

Welcome to the first issue of Inspired! This is a monthly journal prepared by Hadori Sugiarto Adi & Rekan, a member of HLB International based in London, United Kingdom. Inspired is designed to provide the most recent developments in the business environment specifically accounting, tax and regulatory requirements that might be relevant to your business development. It is also our objective to contribute value added economic benefits to your business through the monthly publication of Inspired.

In this edition, we would like to highlight practical implementation issues about the latest Bank Indonesia Regulations regarding transactions using Rupiah and foreign debt.

Since we want the journal to be as relevant as possible to your business’ needs, we look forward to hearing your inputs on each issue. Contact details are furnished at the last part of this journal.

Use Rupiah from today and onwards

Introduction

UU No. 7 2011 about Currency was enacted on June 28, 2011 in Jakarta. The purpose of this Act is the establishment of a Currency IDR affirmed the Republic of Indonesia and all information about the physical and usage as well as sanctions against the diversion, misuse Rupiah in business transactions and payments in the Republic of Indonesia.

Effective on July 1, 2015, all types of payment transactions in Indonesia is obliged to use Rupiah. This provision is stated in Bank Indonesia (BI) Regulation No. 17/3/PBI/2015 concerning Obligation to Use Rupiah in the Territory of the Republic of Indonesia.

The issue

The obligation to use Rupiah as of July 1, 2015 is applicable to all transactions, both cash and non-cash, including transactions using paper and metal currency as legal currency tool in Indonesia. This may result to changes in the functional currency of the companies, thus, they should re-assess the functional currency in accordance to the criteria set forth in PSAK 10 (Revised 2010) – Effect of Changes in Foreign Exchange.