Indonesian Legal Brief

General Corporate
Issue 1807, 12/12/2011

Currency Law Official Interpretation

ollowing the passage of Law No.7 of 2011 on Currency (Currency Law) on 28 June 2011, the Ministry of Finance recently released an official interpretation of the Currency Law called Sosialisasi Undang-Undang Nomor 7 Tahun 2011 Tentang Mata Uang, which is not legislation per se as acknowledged under Law No.12 of 2011 on the Establishment of Laws and Regulations. Issues that are publicly debated with respect to the Rupiah Use clause which is stipulated in Article 21 of the Currency, and the Prohibition to refuse Rupiah as a Legal Tender clause under Article 23, are addressed by the official interpretation. In order to comprehend the problem on the interpretation of Article 21 and Article 23 of the Currency Law, the following is what Article 21 and Article 23 states - followed by the official interpretation by the Ministry of Finance: Article 21 (1) Rupiah shall be used in: a. Any payment transaction; b. Settlement of other obligations that must be met with money; and/or c. Any other transaction, which is elucidated as activities of depositing money of certain amounts and denominations by a depositor to a bank. Item 5.5.1 of the official interpretation elucidates that, the interpretation to Article 21 is limited only to physical cash payment - physical currency transaction (transaksi fisik uang kartal). Transaction in foreign currency using bank money (uang giral) is also allowed under the Currency Law. The use of electronic payment in foreign currency under the official interpretation is also permitted under the Currency Law (i.e money wire, money electronic transfer). The official interpretation defines currency as bank notes and coin, and bank money as cheque, Letter of Credit, and other modern money (uang modern lainnya). Article 23 (1) Any person is prohibited from refusing to accept Rupiah as payment transactions or as obligation settlement and/or for any other financial transaction performed in the territory of the Republic of Indonesia, unless there are doubts over the authenticity of the Rupiah. (2) The provisions in paragraph (1) excludes payments or obligation settlement in foreign currency that has been agreed in writing. Pursuant to Item 5.7 of the official interpretation, specifically of Article 23 (2) clause which states excludes payments or obligation settlement in foreign currency that has been agreed in writing is interpreted as an agreement

Past Issues
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Dispute Settlement Procedures for Public Information (Issue 1806 - 12/9/2011) Social Security Agency (Issue 1805 - 12/8/2011) Material Transactions and Main Business Activity Changes (Issue 1804 - 12/7/2011) Amendment to Regulation on Waiving Import Duties on Property of Foreign Missions (Issue 1803 - 12/6/2011)

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Indonesian Legal Brief

General Corporate
Issue 1807, 12/12/2011
made before and/or after the enactment of the Currency Law. This means that any written agreement which states payment in foreign currency, is suffice to justify the use of foreign currency to a transaction. For a more comprehensive in-depth analysis of the official interpretation of the Currency Law, read this week's Indonesian Law Digest.

Indonesian Legal Brief is a service of PT Justika Siar Publika owner and operator of www.hukumonline.com Puri Imperium Office Plaza UG 15 Kuningan, Jakarta 12319 to subscribe, call 62-21-83701827 or fax to 62-21 83701826 or email layanan@hukumonline.com

Disclaimer: All data and information contain in this service is compiled from various reliable sources. We have taken every effort to ensure the accuracy and completeness of data and information in these services; however, we are not responsible for any errors or omissions. These services are not intended and should not be taken as legal advice or opinion. No action should be taken in reliance of information contained in these services without first

seeking professional services.