On July 12, 2023, the Government of Indonesia (the "Government") enacted Government Regulation No. 36 of 2023 on the Foreign Exchange Export Proceeds from the Business, Management, and/or Processing of Natural Resources ("GR 36/2023"). GR 36/2023 sets as an update to, and revokes, Government Regulation No. 1 of 2019 dated June 1, 2019, on the Foreign Exchange Export Proceeds from the Business, Management, and/or Processing of Natural Resources ("GR 1/2019").

GR 36/2023 will enter into force from August 1, 2023.

Under its consideration, GR 36/2023 states GR 1/2019 must be updated to accommodate the latest developments in the Indonesian financial system. Further, GR 36/2023 states that the foreign exchange export proceeds in relation to natural resources (Devisa Hasil Ekspor Sumber Daya Alam or the "DHE SDA") must be retained in Indonesia's financial system to maintain the sustainability of development, improvement, and resilience of the national economy, as well as to increase the optimization of the utilization of natural resources for the maximum prosperity of the people.

While the main provisions of GR 36/2023 are similar to those of GR 1/2019, there are new provisions introduced by GR 36/2023. We set out the salient provisions of GR 36/2023 below.

♦ Retention and Placement of DHE SDA

Same as GR 1/2019, the DHE SDA under GR 36/2023 is derived from the proceeds of exported goods in the following sectors: (i) mining, (ii) plantation, (iii) forestry, and (iv) fishery. Under GR 36/2023 the DHE SDA from the foregoing sectors currently may be placed by the exporter in a Special Account for the DHE SDA (the "Special Account") with the Indonesian Export Financing Agency (Lembaga Pembiayaan Ekspor Indonesia – "LPEI") and/or a Foreign Exchange Bank (or Bank Devisa in Bahasa Indonesia, a "Bank"). Previously, GR 1/2019 did not stipulate the placement of the DHE SDA with the LPEI.

GR 36/2023 now regulates that the DHE SDA that is retained and placed by the exporter in the Special Account shall remain in the Indonesian financial system for at least 3 (three) months since the placement for a minimum of 30% (thirty percent). GR 36/2023 also stipulates that the placement of the DHE SDA may be conducted in the following:

  1. Special Account at the LPEI or the same Bank;
  2. banking instruments;
  3. financial instruments issued by the LPEI; and/or
  4. instruments issued by Bank Indonesia ("BI").

GR 36/2023 also stipulates that the obligation of to place the DHE SDA above applies to an exporter which has a DHE SDA with an export value in the Export Customs Notification (Pemberitahuan Pabean Ekspor or a "PPE") of at least USD250,000 or its equivalent. GR 36/2023 allows an exporter with an export value less than US$250,000 to voluntarily place the DHE SDA with the Special Account.

Through the retention and placement of the DHE SDA, the Government incentivizes exporters by way of granting certain tax incentives for any income derived from the placement of the DHE SDA and an exporter who places the DHE SDA with the Special Account may be determined as an exporter with good reputation.

♦ Utilization of DHE SDA

There is no difference between GR 36/2023 and GR 1/2019 regarding what the DHE SDA may be used for (e.g., for the payment of export duty and other levies in the Export sector, loans, and others). If such payment is conducted through an escrow account, the exporter shall open an escrow account with either the LPEI and/or a Bank. If the escrow account is opened prior to GR 36/2023's entry into force, it shall be transferred to the foregoing two institutions no later than 90 (ninety) days after August 1, 2023.

While GR 36/2023 permits the DHE SDA to be used for payment, it shall be noted that the DHE SDA placed with either the LPEI and/or a Bank shall remain for at least 3 (three) months since the placement for a minimum of 30% (thirty percent).

♦ Supervision of DHE SDA and Sanctions for Violations

The supervision of the DHE SDA will be conducted by the Ministry of Finance (the "MOF"), BI, and the Financial Services Authority (Otoritas Jasa Keuangan – "OJK") through an integrated information system that is provided and/or used jointly by the foregoing institutions. The supervision by the MOF, BI, and OJK will be the basis for the MOF to either impose an administrative sanction; and revoke an administrative sanction.

An administrative sanction in the form of suspension of export services will be imposed by the MOF on an exporter who:

  1. does not place the DHE SDA in the Special Account;
  2. does not conduct the DHE SDA placement amounting to at least 30% (thirty percent) for a period of at least 3 (three) months; and/or
  3. does not create or transfer an existing escrow account to LPEI or a Bank.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.