The government has officially revived its long-discussed plan to redenominate the rupiah, with the Finance Ministry including the initiative in its 2025-2029 Strategic Plan (Renstra), as stipulated under Finance Ministerial Regulation (PMK) No. 70/2025.

The plan, which aims to simplify the nation’s currency system by removing several zeros from rupiah denominations, is scheduled to be completed by 2027. The Directorate General of Treasury will lead the drafting of the Redenomination Bill (RUU Redenominasi Rupiah).

Besides the redenomination bill, the Finance Ministry will also work on three other draft laws during the 2025–2029 period: the Auction Bill, the State Assets Management Bill, and the Appraiser Bill.

According to the ministry document, the government is pursuing redenomination for four main reasons: to improve economic efficiency and national competitiveness, ensure sustainable economic growth, maintain a stable rupiah value as a safeguard of purchasing power, and enhance the credibility of Indonesia’s currency in both domestic and international markets.

“The Redenomination Bill is a rolling initiative expected to be finalized by 2027,” the document reads.

The proposal echoes an earlier plan outlined in PMK No. 77/2020, which argued that simplifying the number of digits in rupiah denominations would streamline transaction systems, accounting processes, and state budget reporting.

Constitutional Court’s rejection

The redenomination debate has also reached the legal arena. Earlier this year, lawyer Zico Leonard Djagardo Simanjuntak filed a judicial review of the Currency Law (Law No. 7/2011) at the Constitutional Court (MK), arguing that the excessive number of zeros in rupiah notes hampers efficiency and increases the risk of miscalculation in financial transactions.

In his petition, Zico proposed that the law be interpreted to allow a conversion ratio of Rp1,000 to Rp1 and Rp100 to 10 cents, in line with global practices.

However, the Constitutional Court on March 11, 2025rejected the petition in full. Chief Justice Suhartoyo said in the panel’s ruling that the applicant’s argument was “legally groundless.”

Right timing

The idea of redenominating the rupiah has surfaced multiple times since the early 2010s, and the Indonesian Central Bank (BI) has long declared itself technically ready for implementation.

In a June 2023 press briefing, BI Governor Perry Warjiyo said that the central bank already had the design and roadmap for redenomination, but emphasized that execution must wait for the “right moment.”

Back then, Perry outlined three key preconditions for redenomination, macroeconomic stability, financial system resilience, and a conducive sociopolitical climate.

“Macroeconomic conditions are growing, and financial stability is relatively well maintained. However, global uncertainty remains high, and with next year’s elections approaching, we must proceed cautiously,” Perry said on June 22, 2023.