INDONESIA’S travel industry has welcomed the government’s regulation prohibiting foreign currency transactions within the country in order to cut the rupiah some slack, with trade players saying this could improve the travel market.
Rama Tirtawista, group managing director of Panorama Group, said: “We are pleased with this regulation. This will enlarge the leisure and MICE markets.
“For corporates planning overseas MICE, planners usually set a budget one year ahead in rupiah while they are quoted in US dollar, so by the time the event takes place, the expenses may be higher than budgeted due to the depreciation of rupiah,” Rama explained.
Effective July 1 this year, the Indonesian central bank will disallow domestic transactions conducted in any currency but the rupiah.
Eko Yulianto, acting director of money management at Bank Indonesia, was quoted byReuters earlier this month as saying the bank sees at least US$6 billion in demand each month for domestic transactions. “We don’t want a dollarised economy so we need to uphold the sovereignty of the rupiah,” he reportedly said.
Garuda Indonesia’s president and CEO, Arif Wibowo, said the airline would comply with the new regulation. “As the flag carrier, Garuda is committed to supporting government and Bank Indonesia policy. Garuda will implement the regulation soon.”
The carrier has done a cross currency swap to dampen the risks of rupiah fluctuation, and has also submitted a request to IATA to support the regulation.
But Elly Hutabarat, chairman of the Association of Air Ticketing Companies in Indonesia (ASTINDO), said her association was already practising this.
“The regulation has long been (planned). ASTINDO and the Indonesian Hotel and Restaurant Association signed an agreement with Bank Indonesia last November to use only rupiah for domestic transaction, so it is great that the regulation will finally be implemented.”
