Read also: BI to require natural resource exporters to convert forex earnings to rupiahThe date that the new foreign exchange (forex) requirement will be instated depends on the stability of the rupiah, according to a statement BI Governor Perry Warjiyo in August. He said there would be a foreign currency ceiling in companies’ bank accounts and that anything above the threshold would have to be converted into rupiah.The government requires exporters of natural resources to keep their earnings in special bank accounts.Oil and gas exports in 2019, at $12.54 billion dollars, accounted for 7 percent of Indonesia’s total exports that year, Statistics Indonesia (BPS) data shows. Exports of mineral fuel, animal fat and vegetable oil, including the country’s top commodity, palm oil, made up more than a quarter of last year’s total exports.“Frankly speaking, we haven’t been asked about our opinion of the plan,” said Indonesian Coal Mining Association (APBI) executive director Hendra Sinadia. “We need to look into its implementation so it doesn’t hinder [business].”Hendra added that questions remained about how the plan would be implemented. He said coal miners used US dollars to sell their products at home and abroad, as well as to pay royalties.“As a good citizen, Medco will respond and follow these regulations appropriately,” said Anthony Mathias, financial director at PT Medco Energi Internasional.A director of PT United Tractors (UNTR), which owns Indonesia’s second-largest gold miner by output, PT Agincourt Resources, said the parent company had discussed the issue with Bank Indonesia two months ago but was awaiting more detailed guidelines.UNTR, a major player in heavy machinery, mainly exports its gold.“We can’t comment on the details yet, but in the broad sense, if we’re talking about gold, then 30 to 40 percent of our production cost structure is in dollars,” said UNTR finance director Iwan Hadiantoro. “BI assured us this would not negatively impact the company.”UNTR, which reports its finances in rupiah, booked Rp 118.4 billion in foreign exchange losses in the first half of this year, an increase from the Rp 70.5 billion forex loss it posted for the same period last year.The Indonesian Oil Palm Association (GAPKI) declined to comment on the issue.Not all exporters are worried about BI’s plan, such as palm oil exporter PT Astra Agro Lestari, part of diversified conglomerate Astra International.Astra Agro president director Santosa said the company regularly hedged its dollar transactions, including for loans from abroad, against the rupiah.“The company practically has no problem whatsoever,” he said.Astra Agro booked Rp 19 billion in foreign exchange losses in the January to June period of this year, an improvement from the Rp 28.8 billion forex loss it booked in the same period last year.Moody’s Analytics Asia Pacific chief economist Steven Cochrane raised concerns about the effectiveness of the policy, since it only applied to the largest resource exporters.“It sends a message to the market that BI sees stabilizing the exchange rate as a priority,” Cochrane told the Post by email. “On the other hand, the number of new COVID-19 cases is still on an upward trend in Indonesia, which will continue to be a dominant source of instability.”The Health Ministry announced 2,775 additional confirmed COVID-19 cases on Tuesday, bringing the nationwide tally to more than 177,500.Topics : “After we confirmed it with BI, they said it was not yet something of focus, even though there was such a plan,” Bernadus Iramanto, finance director of PT Vale Indonesia, said on Aug 26.“To convert all proceeds from nickel matte sales to rupiah would be a burden of its own.”BI’s plan comes as the rupiah fluctuates significantly against the US dollar during the COVID-19 pandemic. The instability of the currency may pose a risk to the country’s economic recovery efforts.The rupiah fell to a low of Rp 16,575 against the US dollar in March, rebounded to Rp 13,878 in June and had sunk to Rp 14,766 on Wednesday. Indonesian natural resource exporters are waiting to see what Bank Indonesia’s (BI) recently announced plan to require the companies to convert their foreign currency earnings into rupiah will entail. The central bank hopes the policy will help stabilize the rupiah.The measure is expected to apply to companies that exported more than US$300 million worth of natural resources in 2019. It is unclear which companies meet the threshold because data on export earnings is limited, but some major mining companies, such as nickel matte producer PT Vale Indonesia and the country’s biggest privately-owned oil and gas producer PT Medco Energi Internasional, earn and spend US dollars.Players in Indonesia’s top three resource-exporting industries, namely oil and gas, palm oil and mining, knew little about the central bank’s plan.