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Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
 The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulation No. 4/2015 comes into effect from 1 April 2015.
Regulation No. 4/2015 applies to the export of the following prescribed products;
Coal
Unprocessed or partially refined Minerals including;
Iron concentrate | Copper concentrate | Lead concentrate | Zinc concentrate | Alumina | Nickel | Silver | Gold
Crude oil | Liquefied Natural Gas | Crude Palm Oil.
Once in effect, Regulation No. 4/2015 will require Indonesian exporters of the prescribed products to obtain a Letter of Credit from their product buyer for an amount equal to the value of the prescribed products sold prior to the export of the prescribed products.
The Letter of Credit must be received by an Indonesian foreign exchange bank.
The prescribed products cannot be exported without a Letter of Credit in compliance with Regulation No.4/2015.
The Minister shall appoint surveyors to confirm that a Letter of Credit has been received by the Indonesian exporter for the value of the prescribed products sold for the equivalent of (or greater than) the “world price” for the prescribed product. The surveyor shall issue a report which is to be provided to certain government agencies including Bank Indonesia and the Ministry of Finance (but not the Director General of Tax). The prescribed products cannot be exported without the surveyor’s report.
Exporters who do not comply with Regulation No.4/2015 may be subject to sanctions. The sanctions are not specified in Regulation No.4/2015 but may ultimately to suspension or revocation of their export and production licenses for ongoing violations.
Regulation No.4/2015 is subject to further implementing regulations (which have not yet been issued).
The Minister of Trade issued a similar regulation in 2009 (although the range of prescribed products included more agricultural commodities and less minerals and did not include oil & gas). The Minister of Trade revoked the regulation in 2010 stating that at that time, Indonesia’s foreign exchange reserves had improved and the regulation was no longer required.
The stated purpose of Regulation No.4/2015 is to “optimize and accurately record foreign exchange derived from exports while maintaining the stability and improvement of prices of exports”.
Regulation No.4/2015 does not include any transitional provisions so it appears actual export deliveries of prescribed products after 1 April 2015 will need to comply with the Regulation, even though the sales may be subject to a long terms sales contract entered before the enactment of Regulation No.4/2015.
Similarly, Regulation No.4/2015 requires the Letter of Credit to be issued for at least the “world price” of the prescribed product but the Regulation does not define the term “world price”.
One of the major export products subject to Regulation No.4/2015 is coal and the Government of Indonesia has its own “Indonesian Benchmark Price” for coal on which royalty is to be calculated and paid, however, it appears the pricing for coal for the purposes of Regulation No.4/2015 is “world price” and not the “Indonesian Benchmark Price”.
Regulation No.4/2015 also does not recognize that there may be many valid reasons for an exporter selling a prescribed product as less than “world price”. For example, if a buyer makes advance payments to an exporter or if a buyer commits to a long term supply contract with an exporter. (by: Philip Payne | ABNR)
Source: ABNR
About ABNR
ALI BUDIARDJO, NUGROHO, REKSODIPUTRO (ABNR) was founded in 1967 by professionals with a deep respect for the law and a keen interest in assisting clients, both foreign and domestic, to achieve their commercial goals within the Indonesian legal environment.
Ali Budiarjo, Nugroho, Reksodiputro is the exclusive member firm in Indonesia of Lex mundi - the world's leading network of independent law firms with in-depth experience in 100+ countries worldwide.
If you believe an article violates your rights or the rights of others, please contact us.
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Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
Friday, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
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- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Minerals Council of Australia
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Posco Energy - South Korea
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
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