Foreign banks with onshore operations in Indonesia must redraft
contracts to include Indonesian rupiah settlement provisions or
risk potential criminal liability.
O’Melveny & Myers’
Singapore-based corporate finance partner Joel Hogarth told
IFLR many banks were not yet aware of the contractual risks
that could be imposed by Indonesia’s House of
Representatives’ new bill on currency.
The Currency Law, which was passed on May 31 and is due to come into effect on June 30,
formalises the role of the Indonesian rupiah as legal tender
for monetary obligations in Indonesia.
More specifically, it mandates the use of rupiah
for settlement of payment obligations in Indonesia.
But the legislation’s broad scope and
lack of further clarification from Indonesian authorities has
left many uncertain as to what exactly the impact of the new
rules will be.
"Much like the passage...