Mandatory Use of L/C for Exporting Mining and Energy Products

The Minister of Trade (“Minister”) has issued Regulation No. 04/M-DAG/PER/1/2015 on Provisions to Use a Letter of Credit for Exporting Certain Commodities (“Regulation”). The purpose of the Regulation is to optimize foreign-exchange gains from export activities which is realized by ensuring payment certainty for exported natural resource products.[1]

The enhanced payment certainty is implemented by providing guidelines for exporters on using letters of credit (“L/C”). The Regulation affirms an L/C as the mandatory payment instrument for exporting the following natural resource products (collectively referred to as “Commodities”):[2]