Indonesia’s Unwelcome Eid Tradition: Counterfeit Money

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Indonesia’s Unwelcome Eid Tradition: Counterfeit Money

A surge in spending — especially large this year — means an increase in the circulation of fake money.

Indonesia’s Unwelcome Eid Tradition: Counterfeit Money
Credit: Pixabay

Muslims in Indonesia are excitedly awaiting the arrival of Eid al-Fitr, which will fall on June 15. The tradition of what is known in Indonesia as Lebaran is celebrated even more enthusiastically than the other holy Islamic day of Eid al-Adha.

Every year, public consumption in Indonesia jumps sharply with the coming of Lebaran, because society at large is spending more money to celebrate the day with families and relatives. As the need for money increases drastically ahead of Eid, every year irresponsible parties take advantage of the opportunity. Counterfeit money sneaks in amid the waves of spending as people prepare for Eid.

Deputy Governor of Bank Indonesia (BI) Rosmaya Hadi warned that the increase of cash transactions ahead of Eid often leads to the circulation of fake money in Indonesia.

In the previous years, the ratio of fake money recorded by the Bank Indonesia (BI) averaged around 8-11 pieces per 1 million. However, this ratio rose sharply to 21 in 2016. Campaigns and education teaching people to recognize fake money proved quite successful; last year the ratio of counterfeit money decreased to 5 per million. In early 2018, there was even more improvement, with the ratio dropping 3 per million.

This Year’s Cash Surge

Nonetheless, every year the circulation of fake money spikes during Ramadan and Eid. And this year the circulation of counterfeit money has the potential to increase even more than in previous years. There are three main reasons for this.

First, Lebaran this year coincides with the ongoing political year, with regional elections slated for June 27. 171 regions throughout Indonesia — 17 provinces, 39 cities, and 115 districts — will hold elections simultaneously, the culmination of a campaign season that began in 2017.

As voting day nears, political campaign activities are being held routinely. Major events include campaign rallies in stadiums, city streets, bazaars, and elsewhere, which are intended to attract large crowds. Each event also involves large scale spending: catering, renting venues and party equipment – and sometimes even bribes to attract attendees. Thus banking activity and the need for cash has increased dramatically, especially since the 2018 regional election is to be the largest compared to previous election years. Because the government set the election date for approximately two weeks after Eid, then, June 2018 is set to see a massive spike in cash transactions, and thus an influx of counterfeit money.

Second, this year the government decided to extend the public holiday to 10 days, from June 11 to June 20. This will mark the longest national holiday in the past five years. This longer-than-usual holiday has also triggered a more massive Mudik than in the previous years. Mudik is when millions of people return to their hometown to spend time with families and relatives.

The Ministry of Transportation reported a significant increase of Mudik flows. Airplane ticket purchases increased 10 percent year-on-year, to 6 million passengers, with increases of 5 percent for travel by train, and 5.2 percent for travel by boat. Meanwhile, 8 million passengers have bought bus tickets, with an additional 8.5 million travelers using motorcycles, and 3.72 million driving private cars.

One of the largest online ticket purchase sites in Indonesia,, reports that the purchases of train and airplane tickets on its site are up by more than 200 percent. Meanwhile, hotel bookings are four times greater than last year and car rentals have also 300 percent compared to 2017.

The gathering of extended families on Eid triggers even more consumption behavior, as households seek to provide abundant food for the increasing number of guests. Further boosting purchases, traditional markets, supermarkets, and shopping places offer large discounts ahead of Eid. Visitors to the malls in Depok, Jakarta, for example, increased up to 20 percent on the past weekend, reaching 40,000 people per day. Shopkeepers are expected to raise awareness of counterfeit money amid crowds of visitors and a surge in cash transactions.

Third, Eid in Indonesia means giving money to younger relatives and also to neighbors who come to visit and bring their children. This tradition sharply elevates demand for bills of all denominations, from the smallest to the greatest. Moreover, generally the money put into the envelope is newly printed money, not used paper money that is cracked and dirty. Thus people go in droves to exchange their used paper money to get new bills.

However, the unusually long holiday this year will see banks close, and thus many people sought to withdraw cash before the holiday. For these reasons, the demand for new money has been particularly high around Eid this year. The government responded by printing new money for the Eid period — around 188.2 trillion rupiah ($13.5 billion), a 15.3 percent increase over last year’s total of 163.2 trillion rupiah.

The banking industry is also even more active than normal. In the last five years, on average, the outflow drawn by banks in the Ramadan period increased by 13.9 percent. And this year it has reached 25 percent of the total annual outflow.

Addressing the Scourge of Fake Money

As Indonesia’s cash flows balloon in preparation for Eid, distributors of counterfeit money are trying to find ways to distribute their illegal bills, such as distributing them in traditional markets or in many privately managed outlets such as stalls and grocery stores. These places usually lack counterfeit money detectors so they are easy targets for the dealers.

Moreover, in such places, buyers and sellers generally know each other, meaning they will be less on-guard against counterfeit fraud. They may make a transaction using counterfeit money without either party being aware of it.

When doing daily transactions, usually residents shop with large rupiah denominations and deliberately ask for change or exchange money for smaller bills – and particularly new bills. This is where fake money tends to spread.

For this reason, it’s important to encourage people who live in cities or villages to exchange money at official sites provided by BI or widely recognized financial service institutions. In addition to 46 BI branch offices scattered throughout Indonesia, this year BI is also providing mobile cash cars to provide direct access to money exchange services at 1,000 locations such as markets, bazaars, and city parks.

Indonesia also needs to improve its education, teaching citizens to be wary of counterfeit money. Government campaigns such as “dilihat, diraba, diterawang” (meaning that bills should be looked at, touched, and held to up the light) need to actually be applied in everyday life to minimize counterfeit fraud. And when the store provides credit or bank card readers, people should be encouraged to use non-cash transactions, which are much safer than bringing in large amounts of cash when shopping.

The circulation of counterfeit money can be further reduced not only by strengthening money-making technology, so that it will be difficult to duplicate bills illegally, but also by raising public awareness. After all, raids and the arrest of counterfeit dealers and moneymakers usually stem from citizen reports.

Muhammad Zulfikar Rakhmat and Dikanaya Tarahita write regularly on Indonesian social issues.