Rethinking The IDR Requirement As It Relates To Energy, Mining And O&G Companies – Just Another Policy “FLIP FLOP” – It has not taken long for the inevitable confusion and pushback, in respect of the recent imposition by Bank Indonesia (“BI”) of a requirement to use the Indonesian Rupiah (“IDR”) for all domestic transactions (“IDR Requirement”), to make itself felt.
BI has responded to the confusion with (i) a Circular Letter and (ii) a List of Frequently Asked Questions, each dated 1 June 2015, seeking to explain the IDR Requirement. BI also held a Socialization Seminar, in respect of the IDR Requirement, on 4 August 2015. The Ministry of Energy & Mineral Resources (“ESDM”), meanwhile, has issued a Press Release, dated 1 July 2015, indicating that energy, mining and oil & gas (“O&G”) companies will receive special treatment in respect of the application of the IDR Requirement.
Just how effective will be the initiatives by BI and ESDM, to address the IDR Requirement confusion and pushback, remains to be seen. However, it is likely the mishandling of the IDR Requirement was one of the all too frequent policy missteps Indonesia’s President had very much in mind when he
recently told Ministers and other senior State officials that the policy “flip flops have to stop” because they are undermining investor confidence.
In this article, the writer will review the latest developments regarding the IDR Requirement and, more particularly, the special treatment seemingly promised to energy, mining and O&G companies in terms of compliance with the IDR Requirement.