Jul 4, 2014

Indonesia - Indonesian gov't to order seaports to cease US dollar transactions

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Indonesia's Transportation Ministry will soon issue an order obliging all seaport operators across the archipelago to stop charging in US dollars for numerous services.

The ministry’s director general for sea transportation, Bobby Mamahit, said the use of the rupiah was expected to help stabilise the currency.

“We will draft a ministerial instruction obliging all seaport [operators] to conduct transactions in rupiah,” he said on Tuesday, adding that the instruction would be ready next week. “We will also first forbid transactions in US dollars, while we will develop a regulation requiring service charges be set in rupiah, not the US dollar.”

According to Bobby, a lot of seaports remain unaware of the 2011 Currency Law, which stipulates that all domestic transactions should be carried out in rupiah, due to a lack of information dissemination.

Coordinating Economic Minister Chairul Tanjung said during a visit to Tanjung Priok Port in North Jakarta last week that his office would give state-owned port operator Pelindo II three months to start charging in rupiah for services instead of the US currency.

Pelindo II president director RJ Lino insisted that the company would continue to set the port’s terminal handling charges and cost handling charges in greenback.

According to Pelindo II, 30 to 35 percent of transactions at its ports are carried out in US dollars, mostly related to exports and imports, while all domestic transactions were conducted in rupiah.

Responding to the issue, industry groups have called on the port operator to not only use the rupiah in all transactions but also for its service rates to boost the country’s logistics competitiveness.

Indonesian Logistics Association (ALI) said the policy had severely hurt the industry, due to the rupiah’s depreciation against the US dollar.

Nadya Natahadibrata

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