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.
Grow your business in Indonesia with InCorp.
Indonesia export earnings policy introduces new significant changes for exporters. However, with the proper support, these challenges can become growth opportunities.
InCorp Indonesia (An Ascentium Company) is ready to assist your business with reliable solutions. From company registration to import service, we will ensure smooth business operations and compliance with Indonesian regulations.
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Daris Salam
COO Indonesia at InCorp Indonesia
With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.
Frequently Asked Questions
- Set up a PMA (Perusahaan Modal Asing)
- Set up a RO (Representative Office)
The deadline for an individual tax return is 31 March. A corporate tax return must be lodged within four months after the end of the calendar year or taxable year. More information can be found here: 21 Must-Know Facts about Annual Tax Return in Indonesia.
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.
According to the latest provision regarding Halal Product Assurance, halal certification for many consumer products in Indonesia that was previously voluntary has now been mandatory. Food and beverage products are the first Halal certified before 17 October 2024.
Yes, you will receive an administrative penalty for delaying or not correctly and promptly filing the tax report. It is best to hire a local third party to handle your taxation matters in Indonesia, such as InCorp.
