Compulsory Letters of Credit for Certain Export Goods

In order to improve corporate governance, support the conservation of natural resources and primary produce, and to increase the amount of foreign exchange reserves, the Minister of Trade has issued Regulation No. 01/M-DAG/PER/1/2009. The primary purpose of the Regulation is to stipulate the list of export goods that are subject to letter of credit provisions.

All of the export goods listed in Attachment I are subject to the compulsory letter of credit provisions. The export goods subject to these provisions include, among others, coffee; palm oil; mining products; and rubber. A compulsory letter of credit must be done through a domestic foreign exchange bank and all export proceeds must be received through a domestic foreign exchange bank.

The exporter must note the number of the letter of credit in the customs notification form (Pemberitahuan Ekspor Barang / PEB). Furthermore, exporters are required to report their export realizations every quarter to the Minister.

Failure to comply with the provisions of this Regulation gives rise to sanctions.

Any further regulations required in relation to this matter are to be issued by the Director General of Foreign Trade at the Department of Trade.

The Regulation comes into force two months from the date of its enactment on 5 January 2009.