Indonesia’s Foreign Exchange Supervision
As cross-border financial flows intensify, the stability of the Rupiah is increasingly shaped by the growing complexity of foreign exchange movements. Heightened volatility in global capital flows, persistent geopolitical tensions, and the expanding scale of international transactions underscore the need for a governance framework that is both adaptive and resilient.
Against this backdrop, Bank Indonesia enacted Bank Indonesia Regulation No. 9 of 2024 on the Management of Foreign Exchange Traffic (PBI 9/2024) as an implementing regulation of Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector, (UU P2SK). Through which, Bank Indonesia reaffirmsing its mandate to safeguard monetary and financial system stability, while enhancing strengthening oversight mechanisms and the quality of data supporting macroeconomic management.
PBI 9/2024 defines foreign exchange traffic as all activities involving the receipt and disbursement of foreign exchange between residents and non-residents that create financial rights and obligations. This clarifies that any inflow or outflow of foreign currency arising from cross-border financial relationships falls squarely within the scope of this management regime.
Scope of Oversight
Regarding coverage, tThe regulation affirms designates “Rresidents” as the primary legal subjects of foreign exchange traffic management. This classification extends beyond banks to encompass non-bank financial institutions, non-financial business entities, other entities, as well as individuals. Accordingly, any party resident engaged engaging in cross-border transactions is inherently required to submit complete, accurate, and timely data to Bank Indonesia.
The scope of reportable objects transactions is likewise expanded in linealigned with the balance of payments framework. Current account transactions capture foreign exchange flows derived from real economic activities, including trade in goods and services as well as primary and secondary income. In contrastMeanwhile, capital and financial account transactions reflect changes in asset and liability ownership between residents and non-residents, typically arising fromlinked to financing arrangements, investment activities, and the management of cross-border financial instruments.
Compliance and Reporting
In practice, residents are required to submit foreign exchange traffic reports to Bank Indonesia, either directly or through designated third parties. While PBI 9/2024the regulation allows for alternative reporting mechanisms in line with supervisory needs, such flexibility does not dilute diminish the substantive obligation to ensure the completeness, accuracy, and reliability of the reported data.
Consistent with its supervisory mandate, Bank Indonesia is vested with the authority authorized to examine the implementation of foreign exchange traffic management. Such authority extends to requesting clarifications, supporting documents, and access to relevant information systems insofar as necessary to fulfill perform its effective supervisory functionions.
Non-Failure to compliance comply with these obligations, including deficiencies in foreign exchange traffic management and reporting, may trigger result in administrative sanctions, . These ranging range from written warnings to other enforcement measures within Bank Indonesia’s regulatory authority. This underscoresAsserting that the regulatory framework is underpinned by enforceable compliance mechanisms.
Overall, PBI 9/2024 positions foreign exchange supervision within a more structured and coherent regulatory framework. For businesses, the regulation raises compliance standards and necessitates a closer review of foreign exchange activities, reporting practicesprocesses, and internal governance arrangements. Within this framework, compliance serves as a key element of responsible business conduct and supports Indonesia’s broader objective of maintaining financial system stability.
Implementation Challenges
Despite its clear objectives, the effectiveness of PBI 9/2024 will depend on the readiness of reporting infrastructure and the capacity of non-bank corporates and individuals to meet heightened data requirements. Inconsistent data quality limited internal systems, and varying levels of compliance awareness may pose early challenges. Addressing these gaps through guidance, phased enforcement, and system integration will be critical to ensuring the regulation delivers its intended stabilizing impact. (Shintya)