Indonesia president says new export measure to add $80 billion to FX reserves

Indonesian President Prabowo Subianto on Monday signed a regulation requiring exporters of resources other than oil and gas to hold all proceeds locally for at least a year, which he said would add $80 billion to the country's forex reserves.

"Indonesia's natural resources must benefit the welfare of the nation and the people, through development funding, the circular flow of money domestically, increase in foreign exchange reserves and stability of the exchange rate," Prabowo told a televised press conference.

The new measure will be effective March 1, the president said.

Since 2023, Indonesia has required all resource exporters to keep 30% of the proceeds from every export with a shipping document worth at least $250,000 in the local financial system, but Prabowo said exporters still preferred to keep their earnings in banks outside of Indonesia.

Under the new regulation, exporters will be allowed to use the proceeds if they are converted into rupiah, or for business operations such as dividend payments, procurement of raw materials or repayment of loans, Prabowo said.

Oil and gas exporters will only have to keep 30% of proceeds on onshore, in line with the 2023 rule.

Much of the details of Prabowo's new regulation had already been announced by his chief economic minister, Airlangga Hartarto.

Airlangga last month said the central bank would continue to offer instruments to exporters to place their funds and that the government would remove taxes on capital gains from such deposits.