More Indonesian exporters may need to keep their dollars at home

Indonesia plans to toughen rules requiring exporters to repatriate their dollar earnings back home in order to boost the nation’s supply of foreign exchange and support the rupiah.

The government will add manufacturing and several others to the list of industries that must temporarily keep their foreign exchange proceeds onshore, Coordinating Minister of Economic Affairs Airlangga Hartarto said in a briefing on Wednesday. The current rule covers only mining, plantation, forestry and fishery.

It may also revise the requirement for exporters to place their earnings in the country within three months, Hartarto said, noting some other nations apply a longer period of up to one year. “So it’s not only related to the sector, but also the amount. How much foreign exchange is there in the sector, then how long will it be parked in the country?” Hartarto said.

It’s the latest initiative of Southeast Asia’s largest economy to increase its dollar holdings, following a move by the central bank to offer a new instrument that promises “competitive returns” for exporters to park their funds in.

The rupiah slumped over 9% in 2022 — touching two-year lows — despite exports reaching record highs due to the boom in commodity prices. Some exporters opted to keep their funds abroad where they could avail of higher interest rates when Bank Indonesia delayed tightening monetary policy.