Intelligence Brief: Indonesia is tightening its FX onshoring grip. On December 9, 2025, Finance Minister Purbaya Yudhi Sadewa announced a revision to PP 8/2025 that will require natural-resource exporters to place 100% of FX export proceeds exclusively in state-owned banks and cap rupiah conversion at 50%. The revised regulation is in drafting and targeted for January 1, 2026 implementation.
Already in force (PP 8/2025, effective March 1, 2025): 100% retention, 12 months, placement in any authorized FX bank (LPEI or OJK-approved commercial banks), no cap on rupiah conversion for operational use.
Announced revision (Dec 9, pending publication): Adds two restrictions — (1) deposits restricted to state banks only, (2) rupiah conversion capped at 50%. Finance Ministry stated the regulation is "in the coming weeks" with January 1, 2026 as the target effective date.
01. The Objective: Kill the Loophole, Raise Onshore Dollars
Finance Minister Purbaya explained exporters were circumventing retention requirements by converting FX to rupiah, moving funds through smaller banks, converting back to FX, then sending offshore. "The policy hasn't been effective and we need to plug this leak," he stated December 9. The revised policy aims to keep dollars visible, monitorable, and sticky while strengthening rupiah stability.
02. Mechanics: How the Pipe Will Work Under Revised Rules
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Custody: State banks only FX export proceeds must be placed exclusively in state-owned banks (Mandiri, BRI, BNI, BTN, BSI) to simplify monitoring and enforcement. LPEI (Indonesia Eximbank) remains eligible.
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Operational use: conversion capped Only up to 50% can be converted into rupiah for operational needs. Currently no cap exists under PP 8/2025.
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Alternative channel: FX gov bonds Government plans to issue FX-denominated bonds as alternative placement instrument. Minimum $1M investment, tax facilities included. Details per ministry presentation cited by Kontan.
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Permitted uses remain Retained funds can still be used for: tax/government obligations in FX, dividend payments in FX, procurement of imported goods/materials, repayment of FX loans for capital expenditure.
03. Who Wins, Who Gets Squeezed
| Stakeholder | Impact | Why |
|---|---|---|
| State-owned banks (BUMN) | Winner | Capture all natural resources FX deposits; fee income surge; strengthened balance sheets; government policy alignment. |
| Private commercial banks | Loser | FX deposit migration away; corporate relationship pressure; reduced forex liquidity; Citigroup warns of "tightened interbank FX liquidity." |
| Commodity exporters | Mixed/Squeezed | Less flexibility on working capital; higher financing complexity; supply chain payment delays. Palm Oil Association and Coal Mining Association both requested policy review. |
| Bank Indonesia (BI) | Winner | Better visibility into FX flows; easier monitoring vs fragmented private bank system; supports rupiah stability mandate. |
Risk Flag
This can be perceived as a soft capital control, especially by foreign investors in mining, plantation, and nickel sectors. Citigroup noted the policy "does not support the outlook for foreign direct investment inflows." The credibility hinge is enforcement clarity + operational exemptions that keep real-economy supply chains running without excessive friction.
04. Strategic Context: The FX Reserve Play
Government projections: +$80 billion FX reserves in 2025, +$100 billion in 2026. Current reserves: $156.1B (January 2025). The policy is part of Prabowo administration's broader capital management strategy to shore up reserves amid rupiah volatility (briefly crossed 17,000/USD in 2024).
Historical context: PP 36/2023 (August 2023) required only 30% retention for 3 months. PP 8/2025 (February 2025, effective March 1) escalated to 100% retention for 12 months but permitted any authorized FX bank. The announced December revision further restricts to state banks only with conversion cap — a third tightening in under 18 months.
05. Implementation Timeline & Uncertainty
Note: As of December 16, 2025, the revised regulation has not been officially published. Bloomberg and The Edge both reported the rules "will be issued in the coming weeks." Industry should monitor peraturan.go.id for official gazette publication.
Analyst Outlook
"Indonesia is engineering FX stickiness through institutional plumbing. If executed cleanly — clear exemptions, predictable timelines, minimal retroactive enforcement — it strengthens macro stability. If executed sloppily — sudden implementation, opaque rules, banking system friction — it becomes a confidence tax that accelerates rather than prevents capital flight. The difference is implementation detail, and we're still waiting to see those details in black and white."