Strategic Oversight of Foreign Debt Obligations

Foreign debt is no longer merely borrowed money, it has become a barometer of stability, risk, and credibility. Against this backdrop, Bank Indonesia issued Member of the Board of Governors Regulation (PADG) No. 21/4/PADG/2019 on the Reporting of Foreign Exchange Traffic in the Form of Foreign Debt (Utang Luar Negeri/ULN) and Risk Participation Transactions, as amended by PADG No. 23/28/PADG/2021, which These regulations serves as the technical implementing regulation provisions of Bank Indonesia Regulation (PBI) No. 21/2/PBI/2019 on the Reporting of Foreign Exchange Traffic.

These provisions require residents to report all activities that give rise to cross-border financial obligations, including foreign debt, to Bank Indonesia. Foreign debt, in this context, covers encompasses obligations of residents to non-residents in the form of loans, debt securities, or other financing instruments that result increate future obligations to repay principal and/or interest in the future. The reporting requirement obligation applies broadly to banks, non-bank financial institutions, corporates, other entities, and individuals.

Dual-Layer Reporting Mechanism

A distinctive defining feature of this framework is the separation of reporting obligations according to the stage of the transaction. At the planning stage, residents are required to submit a Foreign Debt Plan Report (Rencana Utang Luar Negeri/RULN). This obligation arises when there is an intention to obtain external financing that may create obligations to non-residents. The RULN is forward-looking in nature and includes captures key information, such asincluding the type of foreign debt, currency, financing amount, tenor, and the intended use of funds.

The subsequent reporting stage concerns the reporting of foreign debt that has already been realized. This includes information on drawdowns, principal and interest payments, amendments to loan terms, and the outstanding balance of foreign debt position at the end of the reporting period. From a corporate perspective, this obligation requirements necessitates adequate internal systems to ensure that the submitted data is detailed accurate, comprehensive and aligned with actual cash flows.

Reporting Threshold and Procedures

For corporate entities, all foreign debt is, in principle subject to reporting, regardless of amount. For individuals, however, the reporting obligation arises when the position of foreign debt reaches at least USD 200,000 or its equivalent. Conversion into US dollars is made conducted using Bank Indonesia’s middle exchange rate at the end of the preceding month.

In practice, reports are submitted through Bank Indonesia’s electronic reporting system, in accordance with the formats and procedures set out in the regulatory annexes. Reports on the position and realization of foreign debt are generally due no later than the 15th of the following month, while the RULN must be updated upon in the event of material changes. Delays, non-submission, or and or other form of non-compliance may result in administrative sanctions, primarily in the form of written warnings.

Overall, this regulatory framework establishes a structured supervisory approach that spans both the planning and realization stages of foreign debt. The By distinction distinguishing between planned and realized foreign debt, reporting enables Bank Indonesia is able to obtain forward-looking as well as current real-time insights into residents’ external debt dynamics. For businesses, a clear understanding of these obligations is essential not only for regulatory compliance, and but also for managing external financing in a transparent, disciplined, and well-governed manner. (Shintya)