On 10 January 2019, the Indonesian Government enacted GovernmentRegulation No. 1 of 2019 on Export Proceeds from the Exploitation,Management, and/or Processing of Natural Resources (“GR 1/2019”). Theregulation is purported to maintain the continuity of development as well asthe enhancement and tenacity of the national economy from foreignexchange derived from natural resource exports (Devisa Hasil Ekspor SumberDaya Alam/ “DHE SDA”) entering the Indonesia financial system. GR1/2019 provides the mandatory arrangements for the deposit and use ofproceeds from exports of natural resources from Indonesia. In return,according to some news, the Indonesian Government will grant certainincentives for exporters which comply with GR 1/2019 in the form of adeduction from the tax on fixed deposit interest which will provided under aBank Indonesia Regulation.

Following the issuance of GR 1/2019, Bank Indonesia issued its regulationNo.21/3/PBI/2019 regarding Export Proceeds from the Exploitation,Management, and/or Processing of Natural Resources (“PBI 21”). Thisregulation is one of the implementing regulations that must be issued withinseven days of the issuance of GR 1/2019.

The following are the GR 1/2019 highlights:

1. Mandatory Deposit of DHE SDA: GR 1/2019 obliges Indonesianexporters to deposit their natural resource export proceeds in a ForeignExchange Bank in Indonesia licensed by the Financial ServicesAuthorities (Otoritas Jasa Keuangan/“OJK”) (“Foreign ExchangeBanks”). PBI 21 further explains that a ‘Foreign Exchange Bank’ hereincludes a branch office of a foreign bank in Indonesia, and excludes anoverseas office of a bank that is headquartered in Indonesia.
2. DHE SDA Deposit time limit: export proceeds must be deposited in aspecial account (“Special Account”) at the Foreign Exchange Banks atthe latest at the end of the third month following the filing of the relevantCustoms export notification (Pemberitahuan Pabean Eskpor).
3. Supervision by the Authorities: the Indonesian Government appears todemonstrate its seriousness about enforcing GR 1/2019 by imposingsanctions for non-compliance with GR 1/2019 which include a fine, anexport ban and finally, the revocation of the business license. TheIndonesian Government has 3 (three) main principal supervisors ofcompliance with GR 1/2019 : the Ministry of Finance, Bank Indonesiaand OJK.

Read more about the coverage of GR 1/2019 in our latest advisory.