Jayanty Nada Shofa, Jakarta – President Prabowo Subianto revealed Monday that Indonesia's foreign exchange reserves would skyrocket by tens of billions of American dollars this year as the government would soon require all resource exporters to hold its proceeds onshore.
In about two weeks from now, all resource exporters must keep 100 percent of their earnings within the Indonesian financial system for at least a year. Chief Economic Affairs Minister Airlangga Hartarto had been dropping hints of this policy over the past month.
Speaking in a televised press conference, Prabowo announced that he had inked the policy, saying that Indonesia needed to make such a move so that the country could make the most out of its resource abundance. The policy will come into force on March 1. Within nine months since its entry into force, Indonesia is expected to bring about at least $80 billion in additional foreign reserves this year.
"We have to make the best use of our natural resources to prosper our nation,... including by increasing our foreign reserves and boosting the stability of our exchange rate.... This new policy can add $80 billion to our foreign exchange reserves this year. It can also generate up to $100 billion in additional foreign exchange if the policy is in place for a full year," Prabowo said.
Bank Indonesia recently reported that the country's foreign exchange reserves stood at $156.1 billion by the end of January 2025, up from $155.7 billion registered in the previous month. According to Prabowo, many resource exporters today have been holding their proceeds in foreign banks overseas, thus benefiting other countries instead. Resource-rich Indonesia at present only requires exporters to deposit 30 percent of their export proceeds in domestic bank accounts for at least 3 months.
The upcoming policy will apply to exporters in the mining, plantation, forestry, and fishery sectors. Oil and gas exporters will be exempted from the rule changes, but will still have to comply with the current 30-percent proceeds mandate.
Prabowo said that he would give room for exporters to use the deposited earnings to fund their businesses. They may convert the funds to rupiahs in the same banks to support their operational activities. They can also use the foreign exchange money to pay taxes and dividends. They may also use the proceeds to procure goods and services that are unavailable in the country. However, administrative sanctions await those who fail to comply.
"We will suspend the export services for those who break the rules," Prabowo told the press.
The Central Statistics Agency (BPS) data showed Indonesian exports stood at nearly $21.5 billion in January 2025. Exports had gone down by around 8 percent from the $23.5 billion recorded at the end of December.