Ronald Waas: "Implementation of Use of BI-RTGS System in Money
Settlements for Transactions in the Capital Market"
Speech by Mr Ronald Waas, Deputy Governor of Bank Indonesia, at an event entitled
"Dissemination of Mandatory Use of Rupiah within the Republic of Indonesia", Bank
Indonesia, Jakarta, 15 June 2015.
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Distinguished:
• Heads of banks in Indonesia;
• Chairs or representatives of banking associations or organizations in Indonesia;
• Heads of Departments of Bank Indonesia;
Ladies and gentlemen.
•
Good Morning and May God Bless Us All
1. To begin our event this morning, I would like to invite all of us to praise God the
Almighty for giving us the opportunity to meet in this favorable occasion titled
"Dissemination of Mandatory Use of Rupiah within the Republic of Indonesia".
2. Today, we invite you to have a discussion to establish the same perception and
improve our understanding on banking, as well as disseminate and educate on the
implementation of mandatory use of Rupiah within the Republic of Indonesia. We
are aware that the enforcement of the regulation on Mandatory Use of Rupiah within
the Republic of Indonesia (BI Regulation No. 17/3/PBI/2015 dated 31 March 2015
and BI Circular No. 17/11/DKSP/2015 dated 1 June 2015) is of significant
importance for today's attendees and the community. The reason is the use of
Rupiah closely relates to economic activities in general, primarily payment
transactions in Indonesia.
Ladies and gentlemen,
3. I consider the awareness of mandatory use of Rupiah within the Republic of
Indonesia is based on three significant main dimensions and determines our
identity as a nation.
4. First, legal dimension. This is not a new regulation enforced by Bank Indonesia.
Since 2011, we already have a Currency Law, regulating Rupiah as one of the
symbols of state sovereignty which must be respected and honored by all
Indonesian people. The establishment of Bank Indonesia regulation related
thereon is expected to promote strengthening and purifying payment transactions
within the Republic of Indonesia by the use of Rupiah.
5. Various other regulations have been established, such as Law on the Flow of
Foreign Exchange, Law on Special Economic Zones, Presidential Regulation on the
Blueprint of National Logistics System Development, Regulation of Minister of Trade
on Inclusion of Prices and Tariffs of Goods and Services, and many other relevant
regulations on rupiah, all of which provide a very strong foundation for the use of
Rupiah in the country.
6. Such regulations, directly or indirectly, confirm the mandatory use of Rupiah in any
payment transactions conducted within the Republic of Indonesia, either in cash or
non-cash.
7. Second, nationhood dimension. Many parties see and believe that the main
purpose for Bank Indonesia to implement mandatory use of Rupiah is solely to
support the stability of Rupiah exchange rate. It is not wrong, but other than
economic aspect, one more basic and fundamental reason is to uphold the
sovereignty of the Republic of Indonesia.
8. I would like to use an analogy to explain the nationhood dimension delivered by
President Jokowi in his inauguration speech as the President of the Republic of
Indonesia. He said "we have been ignoring the sea." Indonesia must honor its
own civilization, by returning to the position of Indonesia as a maritime country.
9. In relation to enforcing Rupiah, I would not wish that within the next 5 or 10 years or
even longer, our president will say "we have been ignoring Rupiah."
10. It seems an irony because honestly, it is apparent that the tendency to use dollar
has become increasingly dominant and a daily practice in certain economic
activities.
11. We easily find that dollar is frequently used, starting from quotations, individual
(customer) payment transactions, such as purchases of electronic devices and
apartments, until non-cash payment transactions in a large amount.
12. One of the noteworthy historical records serving as a lesson for us is the release of
Sipadan and Ligitan Islands from the Republic of Indonesia. One of the global
considerations in releasing Sipadan Island is lack of economic transactions and
activities using Rupiah therein.
13. Third, economic/business aspect. Foreign currency transactions within the
country become one of the factors resulting in increasing foreign currency
demand. Such high foreign currency demand in economic transactions will make
our economy vulnerable to economic fluctuations. The trust of Indonesian people
and the international world in Rupiah will strengthen national economic resilience in
general, thereby resulting in the rising dignity of Rupiah, both within and outside the
country.
14. In the excessive net demand for foreign currency within the country, such use of
foreign currency will increase the pressure against Rupiah exchange rate
depreciation. It will potentially disrupt Rupiah stability and add to the complexity of
monetary and exchange rate policies.
15. Bank Indonesia as the central bank realizes that the use of Rupiah as a lawful
means of payment in any payment transactions is a very fundamental element and
serves as a pillar of successful and robust national economy. In the long run, the
mandatory use of Rupiah may also prevent the increasingly spreading dollarization
in our economy, which in turn will support a more sound economic structure.
Ladies and gentlemen,
16. Bank Indonesia realizes that enforcement of mandatory use of Rupiah will not be
easy. Therefore, Bank Indonesia and the government will cooperate with the law
enforcement and state institutions and also collaborate with the private sector.
17. In this regard, we have also cooperated and agreed with the Indonesian Airline
Ticketing Association (ASTINDO) and the Indonesian Hotel and Restaurant
Association (PHRI) to uphold the mandatory use of Rupiah within the Republic of
Indonesia in any transactions related to the business fields of the two associations.
18. We also consider that law enforcement efforts must be balanced with an intense
dissemination and education to the community. Such community awareness is the
first line of defence we must consistently embed to the whole community. Only in
that way will Rupiah become "host" in its own country.
Ladies and gentlemen,
19. We expect that the series of dissemination on mandatory use of Rupiah will
strengthen our commitment to realize the sovereignty of Rupiah within the Republic
of Indonesia and support to achieve stability of Rupiah exchange rate.
20. To conclude, may God will always accompany, guide, and facilitate our steps
towards a better future. Thank you.