As a follow up to Article 40 of Law No. 7 of 2014 on Trade, which states that the government can set the mode of payment and delivery of goods in export and import activities, the Minister of Trade ("MOT") through the Director General of Foreign Trade ("DGFT"), enacted:

  • MOT Regulation No. 04/M-DAG/PER/1/2015 ("MOT Reg 04/2015"), effective 1 April 2015; and
  • DGFT Regulation No. 01/DAGLU/PER/3/2015 ("DGFT Reg 01/2015"), effective 30 March 2015.

The regulations support the efforts to conserve Indonesia's natural resources and ensure the accuracy of foreign exchange from exports. The key obligations under the regulations are:

Obligation to use a Letter of Credit ("L/C")

1. From the effective date of MOT Reg 04/2014, exporters must use L/C for exporting certain commodities or goods, including mineral, coal, oil and gas, and palm ("Certain Goods").

2. The lowest price stated in the L/C must be at least equal to the global market price. The L/C price must be calculated in conformity with the global market price on the date when the price is agreed. If there is no global market price, the export price of the Certain Goods listed under the L/C must use the price which the government determines or the price in the export's designated country.

3. The payment method of the L/C does not include Standby Letter of Credit – see Article 2 paragraph (1) of DGFT Reg 01/2015 and MOT Reg 04/2015.

4. The L/C payment has to be received through a domestic Foreign Exchange Bank. The is to strengthen the enforceability of Bank of Indonesia Regulation No. 13/20/PBI/2011 as amended by Bank of Indonesia Regulation No. 16/10/PBI/2014 on Foreign Exchange Revenue of Export's Result and the Withdrawal of Foreign Exchange of Foreign Debt, which requires that the export's result of Certain Goods from Indonesia be paid to an account in an Indonesian Foreign Exchange Bank.

5. Furthermore, an exporter of Certain Goods must attach the L/C to the customs documents, namely Export of Goods Notification (Pemberitahuan Ekspor Barang - PEB).

Export of certain goods and the obligation to be furnished with surveyor's report

1. In the case of the export of Certain Goods which must be furnished with a surveyor report, the exporter must submit a statement letter with stamp duty to the surveyor as determined by the MOT.

2. If the export of goods is not required to be furnished with a surveyor report, the exporter must submit a duly stamped statement letter to the local Head of Customs and Excise Service Office, copying the Director General of Customs and Excises. The Ministry of Finance and DGFT in which the statement letter is drafted must be based on Appendix II of DGFT Reg 01/2015.

The surveyor can only issue a surveyor report after examining the L/C documents and the statement letter which the exporter submits to the surveyor. The surveyor's report has to state the usage of L/C for exporting Certain Goods.

Reporting obligation for exporter and surveyor

1. The exporter must submit to the DGFT, monthly realization reports on the export of Certain Goods completed with final price of L/C.

2. The surveyor must submit to the DGFT, monthly recapitulation reports of the surveyor's report.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.