Indonesia has introduced a new policy requiring exporters to keep their foreign earnings in local banks. This policy aims to strengthen the country’s foreign exchange reserves and protect the economy from global risk.
This article will explain why this policy matters and how businesses can stay compliant and successful under these new rules.
Why the new retention policy is important
Indonesia recently significantly changed its foreign exchange rules through Government Regulation Number 8 of 2025. This new regulation replaces earlier policies and requires natural resource exporters to keep all their foreign currency earnings within Indonesia’s financial system for at least one year.
The Indonesia export retention policy is key to maintaining the country’s economic stability. It ensures that export revenues strengthen the national economy and support financial resilience.
Securing Indonesia’s Foreign Exchange Reserves
Many exporters hold their earnings overseas, limiting the currency flow into Indonesia. Keeping the export earnings onshore will help maintain enough foreign currency to pay for imports and debt.
Stabilizing Local Currency
The policy helps reduce pressure on the Indonesian rupiah by improving foreign currency availability in local markets. A stable rupiah means lower inflation and more predictable costs for businesses and consumers.
Boosting Investor Trust
Firm reserves and a stable currency make Indonesia more attractive to foreign investors and improve Indonesia’s economic outlook.
Reducing Dependence on Foreign Loans
With more foreign currency retained domestically, Indonesia can rely less on foreign loans, making the economy more resilient to global financial shifts and risks.
Read more: Expect export earnings policy to boost forex reserves
What are the key updates?
The new Indonesia export earnings retention policy introduces several essential rules that exporters must follow. Here are the essential updates on the current policy:
1. Mandatory Onshore Placement
Exporters in sectors like mining, plantation, fisheries, and forestry must place their foreign currency earnings in special accounts at the Indonesian Export Financing Institution or foreign exchange banks approved by the Financial Services Authority.
2. Minimum Retention Period
Export proceeds must remain in these accounts for at least one year before they can be accessed or used. This is a significant change from the previous rule, where only 30% of the earnings were held for three months.
3. Permitted Use of Retained Earnings
Exporters are allowed to utilize retained funds for specific purposes, including:
- Converting foreign currency into Indonesian rupiah through authorized banks
- Making tax and non-tax payments to the state
- Paying out dividends in foreign currency
- Purchasing raw materials and capital goods
- Servicing foreign currency loans
4. Stronger Monitoring and Reporting
Companies must report regularly on the placement and use of their export earnings. The central bank and other regulatory bodies will actively oversee and enforce compliance with these requirements.
Key incentives for exporters: Special tax benefits
To promote compliance with the new policy, the Indonesian government offers tax incentives for exporters, including a 0% income tax rate on interest income generated from their foreign exchange accounts maintained within Indonesia.
By keeping their export earnings onshore, exporters can:
- Lower their tax obligations on interest earned from the retained funds
- Benefit from simplified procedures when fulfilling tax and non-tax state payments
- Gain the possibility of reduced withholding taxes
Read more: Navigating import duties and taxes in Indonesia.
How the new regulations affect exporters
The new Indonesia export earnings retention policy brings several changes that directly impact how exporters manage their foreign exchange earnings.
Here are several initial challenges for your businesses to note:
Tighter Control Over Export Proceeds
The mandatory placement of foreign currency earnings into Indonesian bank accounts for a year limits the flexibility to move funds freely across borders.
Impact on Cash Flow Management
With earnings locked in for longer, exporters must carefully plan their cash flow. Delays in accessing funds could affect operational costs, loan repayments, or investment decisions.
Potential Compliance Risks
Failure to follow the new rules may result in sanctions, fines, or suspension of export permits. Exporters need to ensure full compliance to avoid issues with their business operations.
Adjustment In Banking Relationships
To comply with the policy, exporters may need to open new accounts or restructure existing ones with Indonesian banks authorized to handle foreign exchange transactions.
Initial strategies for investors
The new export earnings retention policy may limit cash flow flexibility and add compliance tasks for exporters. However, robust cash flow planning can manage these challenges. Proper cash management helps ensure the one-year retention period does not disrupt daily business.
Businesses should also actively manage currency risks using tools like forward contracts or currency swaps. These strategies help protect the value of foreign earnings from exchange rate fluctuations during the retention period.
By focusing on the right strategies, exporters can stay compliant and keep their operations running smoothly under the new policy.
Read more about Indonesia’s top export-import business ideas.
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Ales Cina
Consulting Manager at InCorp Indonesia
Aleš manages solution delivery at InCorp Indonesia, optimizing incorporation processes and client relationships. His experience in internal auditing, retail, and sales offers valuable global insights. Aleš, with a degree in Economics and Finance from the Czech Republic, helps clients navigate cross-border business challenges, focusing on cultural and legal insights.
Frequently Asked Questions
- Importer Identification Number (Angka Pengenal Impor or API)
Producer Importer Identification Number (Angka Pengenal Impor Produsen or API-P), which is required for the import of machinery and equipment, goods, and materials used in production.
General Importer Identification Number (Angka Pengenal Impor Umum or API-U), which is required for the import of specific goods for trading purposes, is grouped under one section in the Customs Classification System. - Customs Identification Number (Nomor Identitas Kepabeanan or NIK), It functions as an identifying document for the applicable Customs and Excise authorities during the customs clearance process.
- Set up a PMA (Perusahaan Modal Asing)
- Set up a RO (Representative Office)
- Annual financial report
- Investment realisation report
- Manpower and employee welfare report
- Expatriate utilisation report
- Company loan repot
- Foreign exchange and prudential principles report
A PMA company in Indonesia must obtain an NIB, which also functions as:
Some goods may face limitations or restrictions on importation in Indonesia, potentially requiring additional approval from the Ministry of Trade. Recommendations from technical ministries like Industry or Agriculture may influence these approvals.
Within the scope of foreign direct investment in Indonesia, foreign investors can typically do business in two ways:
PMA is a local subsidiary in the form of a limited liability corporation for foreign investment reasons
According to Law No. 25/2007 on Investment, foreign investors are required to establish a PMA company in order to make direct investments and conduct commercial and business activities in Indonesia. A PMA firm in Indonesia is a legally recognized business entity that can engage in various commercial and business operations as long as it complies with the current laws and regulations. As for RO, its purposes include conducting market feasibility studies and liaison activities.
CV (Commanditaire Vennootschap) is a proprietary business entity that houses several individuals to run a business.
In Indonesia, a PMA company is typically required to submit various reports to relevant authorities, such as:
However, depending on the business activities and classification relevant authority may require additional reports from a PMA company.
