Hans David Tampubolon, Jakarta – The government has completed its final formulation of the rupiah re-denomination bill and is set to submit it to the House of Representatives to be passed into law.
Finance Minister Agus Martowardojo said on Friday that the main substance of the bill would be the simplification of the rupiah by removing three zeros from the currency without tampering with its economic value.
"For example, now we buy a cup of coffee for Rp 50,000 [US$5.21] but after the re-denomination, the value that we pay and the price of the coffee will be converted into Rp 50," Agus said.
The plan to re-denominate the rupiah was first proposed by Indonesia's central bank, Bank Indonesia (BI), in 2010. BI Governor Darmin Nasution said at the time that re-denomination was part of the government's efforts to comply with regional economic reforms to coincide with the establishment of the ASEAN Economic Community (AEC) in 2015.
Based on BI's initial proposal, the re-denomination policy is separated into four stages; namely preparation, dual-label procedures, the removal of old currency and a finalization stage to ensure that none of the old currency remains in circulation. The program is set to last from 2011 to 2022.
Meanwhile, the House legislative body chairman, Ignatius Mulyono from the Democratic Party, said that legislators were ready to accept the government's proposal on the re-denomination bill.
"We are still waiting for the bill to be officially submitted so that it can be proposed for inclusion in the 2013 priority bills program," Ignatius said.
Ignatius said he believed the bill should be included as one of the priority bills for next year because it would provide numerous benefits for Indonesia's economy once it came into effect.
"Re-denomination will simplify and accelerate transactions because once three zeros are omitted, the numeral system for the rupiah will be much simpler. Re-denomination will also make our currency's exchange value against other currencies simpler and more fair," he said.
Ignatius reminded the government to conduct a thorough introduction to the public on the planned re-denomination policy because most people in Indonesia still believed the policy would affect the economic value of the rupiah.
"The public needs to know that re-denomination will not decrease the rupiah's economic value, it will merely simplify it," he said.
Due to hyperinflation in the 1960s, the government conducted a currency policy known as sanering, in which three zeros were cut from the rupiah and, at the same time, the currency's economic value was also reduced.
Agus said the government was conducting numerous public awareness programs for the planned re-denomination policy but they were so far limited to the central administrative level.
"We will intensify our program on the re-denomination policy for those people in more remote areas of the country starting December through March next year," he said.
"We hope the public introduction program on the policy will receive a positive response from all stakeholders so that we can pass the re-denomination bill into law by June next year," he added.