Indonesia Considers Incentives to Keep US Dollars Domestically

Indonesia is preparing new measures to encourage its citizens and businesses to retain U.S. dollars inside the country’s financial system rather than sending them abroad. The initiative, revealed by Finance Minister Purbaya Yudhi Sadewa, is designed to boost foreign exchange reserves and secure dollar financing for key national projects under President Prabowo Subianto’s administration.

The policy reflects Jakarta’s ongoing effort to maintain financial stability while ensuring liquidity in foreign currency markets at a time when global capital flows are increasingly volatile.

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Key Takeaways

• Finance Minister Purbaya Yudhi Sadewa is considering market-based incentives to keep U.S. dollars within Indonesia.
• The plan aims to support foreign exchange reserves and provide adequate financing for infrastructure and other strategic projects.
• Many Indonesians currently send dollars abroad each month, creating capital outflows that weaken domestic liquidity.
• Incentives are expected to make local dollar deposits more attractive and competitive.
• The policy aligns with President Prabowo Subianto’s push for stronger financial sovereignty.

Why Indonesia Wants to Retain US Dollars

Indonesia’s economy depends heavily on stable foreign exchange reserves, which are critical for defending the rupiah, financing imports, and supporting investor confidence. Currently, many individuals and businesses move their U.S. dollar holdings offshore, reducing domestic liquidity.

Minister Purbaya highlighted that this outflow is significant on a monthly basis. By offering incentives, the government wants to channel these dollars back into the local system, strengthening Indonesia’s financial independence and reducing reliance on external funding sources.

Possible Incentives for Domestic Dollar Retention

While details are still being developed, Purbaya stated that the incentives will follow a market-based scheme. Potential options include:

• Higher interest rates or yield benefits for domestic dollar deposits.
• Tax breaks or regulatory advantages for companies holding dollars locally.
• New investment products that allow Indonesians to deploy dollar savings into government-backed projects.

Such measures are designed to compete with overseas financial centers that currently attract Indonesian capital.

Role of Prabowo Subianto’s Government

President Prabowo Subianto’s administration has emphasized the importance of strengthening Indonesia’s financial resilience. Dollar retention incentives would fit into a broader strategy of building self-sufficiency, funding infrastructure, and maintaining macroeconomic stability.

By ensuring that more dollar liquidity remains inside Indonesia, the government can support its ambitious agenda while reducing vulnerabilities to external shocks.

Implications for Indonesia’s Forex Policy

If implemented, the policy could have several effects:

• Boosting Forex Reserves: More domestic dollar deposits would increase central bank flexibility in managing currency stability.
• Strengthening Rupiah Confidence: Reduced capital outflows could help stabilize the rupiah in times of market volatility.
• Supporting Development Projects: Retained dollars would provide financing for large-scale infrastructure and industrial programs.
• Encouraging Financial Sovereignty: The policy aligns with Indonesia’s long-term goal of balancing growth with monetary independence.

Final Thoughts

Indonesia’s consideration of incentives to retain U.S. dollars domestically underscores the government’s determination to strengthen its financial foundations. Under Finance Minister Purbaya Yudhi Sadewa and President Prabowo Subianto, the strategy reflects a proactive approach to managing forex reserves and sustaining growth.

While success will depend on the attractiveness of the incentives and the trust of market participants, the initiative could reshape capital flows and enhance Indonesia’s resilience in the global economy.

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FAQs

What are Indonesia’s dollar retention incentives?

They are proposed measures to encourage Indonesians to keep their U.S. dollar holdings within the domestic financial system instead of moving them abroad.

Why is Indonesia considering this policy?

To boost foreign exchange reserves, support the rupiah, and ensure sufficient dollar financing for infrastructure and strategic projects.

Who announced the plan?

Finance Minister Purbaya Yudhi Sadewa, recently appointed under President Prabowo Subianto’s government, revealed the initiative in September 2025.

How will the incentives work?

Details are still under discussion, but they will likely include market-based schemes such as higher deposit yields, tax advantages, or new dollar-denominated investment products.

How could this affect Indonesia’s economy?

The policy could strengthen foreign reserves, stabilize the rupiah, and improve financial sovereignty, though much will depend on execution and investor response.