By : Mutiara Rengganis, Bob Allen Simatupang, Siti Kartikatul Qomariyah
Key Regulatory Update: Indonesia’s New Requirements on Foreign Exchange Export Proceeds from Natural Resources
Commencing on 1 August 2023, significant updates, and new requirements on Foreign Exchange Export Proceeds from Natural Resources (Devisa Hasil Ekspor dari Barang Ekspor Sumber Daya Alam – “DHE-SDA”) have come into effect, as outlined in the recently enacted Government Regulation of the Republic of Indonesia Nr. 36 of 2023 on Foreign Exchange Export Proceeds from the Business, Management and/or Processing of Natural Resource, dated 12 July 2023 (“GR Nr. 36/2023”). This GR Nr. 36/2023 supersedes the previous government regulation on DHE SDA, i.e., the Government Regulation of the Republic of Indonesia Nr. 1 of 2019, dated 10 January 2019.
In a strategic leap towards propelling economic advancement, the Government of the Republic of Indonesia (“GOI”) has unveiled this transformative GR Nr. 36/2023. This regulation is designed to enhance the placement of the DHE-SDA within the Indonesian financial system. By strengthening requirements on the placement of DHE SDA within the Indonesian financial system, GOI aims to foster sources for financings and investments in economic development in the natural resources sector, fortifying macroeconomic stability and strengthening domestic financial markets. With expectations of a notable increase in DHE-SDA placement participants (exporters), GOI is also now offering fiscal and non-fiscal incentives to exporters who comply with the DHE-SDA new regulations.
A new set of implementing regulations is also issued following GR Nr. 36/2023, i.e.:
(GR Nr. 36/2023 together with BI Regulation No. 7/2023 and MoF Regulation Nr. 73/2023 shall be referred to as “DHE SDA New Regulations”)
I. Requirements and Exemptions on the DHE-SDA
In addition to the previous requirement that exporters are obliged to place their DHE-SDA derived from mining, plantations, forestry and fisheries business activities into the Indonesian financial system no later than the end of the third month as of the month of the Export Customs Notice (Pemberitahuan Pabean Ekspor – “PPE”) registration, the DHE-SDA New Regulations stipulate additional requirements that:
This placement obligation is not intended to convert DHE-SDA to Rupiah, therefore, the currency can be kept in the form of foreign currency (i.e., United States Dollar, Euro, Japanese Yen or Chinese Renminbi). Nevertheless, should any issues related to macroeconomic stability and/or financial system stability arise, the Designated Account may need to be converted as per the relevant laws and regulations.
The placement obligation applies to each PPE. If single placement are resulting from multiple PPEs, the Retained Minimum 30% DHE-SDA applies for the total Export Values across all PPEs, even if each Export Value in each PPE is less than USD250,000.
a. Specific regulations for the Retained Minimum 30% DHE-SDA
While there are limitations on its utilization, the Retained Minimum 30% DHE-SDA can be placed throughout the following instruments (“30% DHE-SDA Instruments”):
provided that the term of the instruments shall be at a minimum of 3 (three) months and cannot be retrieved prior to the due date.
Other than that, the exporters are allowed to use the 30% DHE-SDA Instruments as credit collateral for rupiah denomination credit/loan granted by the FX Banks and/or LPEI and other uses stipulated by Bank Indonesia, as follows:
It should be noted that (a) the amount of credit shall be at a maximum of the nominal value of the instruments; and (b) the period of credit and credit collateral shall be in accordance with the remaining period of the instruments.
b. The source of placement into the Designated Account
Designated Account is made specifically for the placement of DHE-SDA. As such, funds allowed to be transferred into the Designated Account are only limited to the following:
Funds transferred into the Designated Account from the earlier sources must be supported by relevant documents, such as PPE, invoices, and other relevant reports.
c. The utilization requirements of the Designated Account
The utilization of DHE SDA in the Designated Account is only allowed for payments associated with:
In making such payments, exporters are permitted to establish escrow accounts with FX Banks/LPEI. If foreign escrow accounts have been established before 1 August 2023, they must be migrated to the escrow account with FX Banks/LPEI. However, the migration of an existing foreign escrow account must be completed within 90 (ninety) days from 1 August 2023.
In addition to the above, funds transferred out of the Designated Account must be supported by supporting documents, i.e.:
d. Reporting obligations
As consequence of the above requirements, each fund transferred in or out to the Designated Account must be informed to FX Banks/LPEI, which at least contains information, i.e., transaction value, transaction purposes, transaction parties, and financial relationships between transaction parties.
II. Fiscal & Non-Fiscal Incentives
As part of the endeavor to boost DHE-SDA placement within the Indonesian financial system, GOI has established a good intention that exporters may be awarded with fiscal and/or non-fiscal incentives upon complying with the DHE-SDA New Regulations.
Fiscal incentives may be granted toward any income arising from DHE-SDA placement as outlined above. These incentives could be in the form of a relaxed tax facility in accordance with applicable laws and regulations. Non-fiscal incentive is awarded by giving sound reputation for exporters who have placed DHE-SDA in the Designated Account.
Additionally, upon its own discretion, Bank Indonesia/FX Banks/LPEI may directly grant their own incentives to exporters for establishing and maintaining the Designated Account and the 30% DHE-SDA Instruments.
III. Monitoring and Applicable Sanctions
a. General Monitoring Provisions
Monitoring for the implementation of DHE-SDA New Regulations will generally be carried out by the Ministry of Finance (“MoF”) through an integrated system prepared by MoF, Bank Indonesia, Indonesian Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) and other relevant government institutions. The enforcement of such sanctions, however, will respectively be carried out by the relevant technical ministries and/or institutions.
b. Administrative Sanctions
MoF may use the reports submitted by Bank Indonesia and OJK to consider imposing and/or revoking an administrative sanction. If Bank Indonesia and OJK reported that an exporter is non-compliance due to (a) not placing the DHE-SDA in the Designated Account as required, (b) not retaining the Retained Minimum 30% DHE-SDA in the 30% DHE-SDA Instruments within the permitted period, and/or (c) not creating nor migrating its existing foreign escrow account at the FX Banks/LPEI within the permitted period, such exporter can be imposed by administrative sanction in the form of denying export services pursuant to applicable laws and regulation in custom sector (including blocking of exporters’ access to the export customs service system).
This summary only highlights certain issues under the DHE-SDA New Regulations and may not be complete and comprehensive.
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For more specific inquiries about this matter or other emerging legal issues in Indonesia, please contact the following lawyers:
- Mutiara Rengganis (Mutiara@aymp.law)
- Bob Allen Simatupang (Bob.Allen@aymp.law)
- Siti Kartikatul Qomariyah (Kartikatul@aymp.law)
 The Indonesian financial system is a system consisting of financial institutions, financial markets, and financial infrastructure, including payment systems, which interact to facilitate the collection of public funds within the Indonesian economy.
 In cases where the Export Value is less than USD 250,000 (or its equivalent), exporters can voluntarily place the DHE-SDA into the Designated Account. In this scenario, further obligations regarding the placement apply to them as well, including the Retained Minimum 30% DHE-SDA requirements.
 Only for export transactions from LPEI debtors.