House on Board With Govt Plan To Redenominate the Rupiah
A rupiah redenomination bill is currently being sought by the Indonesian government and it is asking the House of Representatives to start the legislation process for the bill next year.
The redenomination is an attempt to simplify currency transactions by replacing the currency with a new one. In the past, officials have mooted the idea of removing three zeros from the rupiah. For example, a Rp 1,000 note would become simply Rp 1.
Finance Minister Agus Martowardojo conveyed the plan to House Deputy Speaker Anis Matta on Friday, according to Ignatius Mulyono, chairman of the House’s legislation committee.
“The House accepted the government’s plans,” Ignatius said. “We are now awaiting the draft to be submitted to the House.”
Ignatius said that the House would discuss whether the redenomination bill could be included in the 2013 national legislation program — a list of bills that the House targets to ratify during a year.
An academic study of the bill, Ignatius said, has been completed. “With the redenomination, transactions would be simpler and faster,” he said.
Bank Indonesia has introduced higher-denomination bills five times since 1964 because of inflation. That makes current daily transactions often run into the millions of rupiah.
The Rp 100,000 ($10.43) note is now the second-highest denomination banknote in the region after Vietnam’s 500,000 dong note.
There are concerns, however, that the proposal could devalue the currency. But Ignatius said that the House would ensure that the government would conduct intensive socialization programs for the public should the bill be passed.
Agus said that the government and Bank Indonesia had coordinated closely to transform the redenomination idea into a workable plan.
He also added that any redenomination process would take anywhere from five to 10 years to complete.
One of the likely consequences of a redenomination is marked prevalence in the use of coins because they are worth smaller denominations.