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Indonesia Now Requiring “Letter Of Credit” On Exports Of Certain Goods

World Trade

Open Eyes Opinion {source: IDgov}

Indonesia

Mandatory L/C on Exports of Certain Goods Begin to Go into Effect, The Trade Minister Stipulates Special Provisions on Its Implementation

Jakarta, April 2015 – The Ministry of Trade issued Minister of Trade Regulation Number 26/MDAG/PER/3/2015 Concerning Special Provisions on the Implementation of the Use of Letter of Credit on Exports of Certain Goods on 30 March 2015.

“The issuance of this Minister of Trade Regulation follows the going into effect of Minister of Trade Regulation Number 04/M-DAG/PER/1/2015 concerning the Use of Letter of Credit on Exports of Certain Goods,” explained Minister of Trade Regulation Rachmat Gobel, today (1/4), at the Ministry of Trade Office.

This Minister of Trade Regulation Number 26 Year 2015 basically regulates two things, namely the postponement of the use of Letter of Credit (L/C) as a form of payment for exporters and giving an opportunity to the Indonesia Export Financing Institution (LPEI) to participate in the process of paying by way of L/C.

“The postponement can only be done by meeting the requirements that has been set. This is meant to give time to exporters to adjust and revise contracts that have been made and signed prior to the stipulation of the Minister of Trade Regulation Number 04/2015 so that it doesn’t impede the export process,” explained the Trade Minister.

Furthermore, the Trade Minister explained that the postponement was provided by the Minister of Trade after receiving considerations from Ministers related to the fulfillment of the requirements that have been determined.

”In this case the considerations came from the Minister of Energy and Mineral Resources for oil and gas, coal, and minerals (including tin) while the Minister if Agriculture provided considerations regarding crude palm oil (CPO) and crude palm kernel oil (CPKO),” added the Trade Minister.

After the postponement of the use if L/C as method of payment for the export of certain goods has been granted, a post audit will be conducted by the Team formed by the Minister of Trade.

If the post-audit results are inaccurate, then a penalty would given, namely the ending of the postponement, which means the exporter would not be able to export unless by changing the method of payment to L/C.

Other penalties would be imposed according to laws and regulations that apply. For payment by way of L/C, other than through domestic Foreign Exchange Banks, L/C payment can be done through export financing institutions formed by the Government that are required to abide by the provisions of Bank Indonesia Concerning Foreign Exchange from Exports.

“Through Minister of Trade Regulation 26/2015, we hope that the transition to payment by way of L/C can go smoothly so that the goal of Minister of Trade Regulation 4/2015 can be achieved,” said the Trade Minister.

For further information please contact: Ani Mulyati Head of Public Relations Center Ministry of Trade Tel/Fax: 021-3860371/021-3508711 Email: pusathumas@kemendag.go.id Nusa Eka Director of Export and Import Facility Directorate General of Foreign Trade Ministry of Trade Tel/Fax: 021-3450071/021-3450071 Email: nusa.eka@kemendag.go.id

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