New Regulation on Letter-of-Credit Transactions at Bank Indonesia Introduced

By definition, a letter of credit (“L/C”) is an absolute undertaking that is irrevocable and that functions as a guarantee from an issuing bank in order to complete a payment in accordance with the terms and conditions of the relevant L/C.[1] If said payment involves funds that are allocated under the state budget and is to be made in relation to an agreement that utilizes foreign exchange, then the payment may be completed through L/C transactions that are undertaken through Bank Indonesia (“BI”).[2]