Indonesia Requires Resource Exporters to Keep All Proceeds Onshore for Year

Indonesia is set to implement a new regulation requiring natural resource exporters to retain all of their foreign exchange proceeds onshore for a minimum of one year, starting March 1. This move is aimed at stabilizing the rupiah and increasing foreign exchange reserves, which have been under pressure due to capital outflows. Currently, exporters are only required to retain 30% of their proceeds for three months, a change that has already raised their interest expenses. The government has exempted oil and gas exporters from this new rule, acknowledging the significant cash flow impact it could have on their operations. Exporters have raised concerns about the burdensome nature of this regulation, especially regarding operational costs that are typically paid in U.S. dollars. The government plans to offer incentives and discuss feedback with industry representatives to ease the transition.