BI exempts some oil, gas transactions from obligatory use of rupiah
Thursday, July 2 2015 - 12:56 AM WIB
The oil and gas companies may continue using foreign currencies in some transactions despite the regulation of Bank Indonesia (BI) on the mandatory use of rupiah.
This is part of the agreement reached by the Ministry of Energy and Mineral Resources and the central bank following the implementation of the regulation on the mandatory use of rupiah, the ministry said in a statement.
The BI Regulation No: 17/3/PBI/2015 regarding the Mandatory Use of Rupiah in the Republic of Indonesia, which was issued on March 31, 2015, is effective Wednesday. The regulation gives rooms for certain business, including infrastructure companies, to request for exemption
The ministry has asked some transactions in the oil and gas industry to be exempted from the regulation, noting oil and gas is a strategic industry.
The ministry and the central bank have finally reached agreement as follows:
1. Both the ministry and BI will cooperate in formulating implementing measures so that the implementation of the regulation in the energy sector will run well and maximally reach its goal, while anticipating problems that may occur.
2. In view of the distinct characteristics owned by the energy industry, the BI regulation can not be fully and immediately implemented in all transactions. The transactions thus need to be divided in several categories based on their characteristics:
- Category 1, transactions where the BI regulation can be immediately implemented, such payment for office/house/car lease, payment of local worker salaries, support services.
- Category 2, transactions which need time of preparation for the implementation of the regulation, such as payment of fuels, import transactions through local agents, long-term multi-currency contracts.
- Category 3, transactions where the BI regulation is difficult to be implemented, such as payment of expatriate workers, drilling service and vessel lease
3. For the Category 1 transactions, BI provides a transition period of six months
4. For the Category 2 transactions, companies which already signed contracts may continue using foreign currencies over the contract period, but they must explore the possibilities of reviewing the contracts.
5. For the Category 3 transactions, companies may continue using foreign currencies.
6. The ministry and BI will form a task force to facilitate and assure the business sectors will not face difficulties and their business activities may continue as normal
7. The ministry and BI will jointly issue a guideline on the implementation of the BI regulation in the energy sector.
Editing by Johannes Simbolon