Indonesian Government Flexible on Mandatory Letter of Credit (L/C)
Amid unclarity over the newly introduced mandatory use of letters of credit (L/C), the Indonesian government has showed some flexibility. Starting from Wednesday (01/04) Indonesian exporters of four key commodities - coal, palm (kernel) oil, oil & gas, and minerals - are required to use L/C for all export deals. This new rule was developed in order to increase Indonesia’s export earnings and enhance monitoring sales of the country’s natural resources. However, a temporary exemption is now made possible.
Indonesian Trade Minister Rachmat Gobel announced that the government offers flexibility for those exporters that are unable to comply with the new L/C rule yet. Gobel said when exporters obtain an exclusion from the Indonesian Energy and Mineral Resources Ministry or the Indonesian Agriculture Ministry, they can be excluded temporarily from the obligation in order to give them time to adjust and revise contracts that were signed before Trade Ministry Regulation No. 04/2015 on L/C Mandatory Use was issued.