REPUBLIKA.CO.ID, JAKARTA -- The Ministry of Trade issued Regulation of the Minister of Trade No. 94 of 2018 concerning provisions on the use of a Letter of Credit (L/C) for four business sectors. Minerals, coal, palm oil, and oil and earth gas business sectors are required to use L/Cs in some of their transactions.
"The issuance of this regulation of the Minister of Trade is one of the efforts to strengthen the country's foreign exchange reserves in the midst of global economic uncertainty," Trade Minister Enggartiasto Lukita said in a statement on Monday.
The policy to strengthen the country's foreign exchange reserves through an L/C with the issuance of this regulation of the Minister of Trade is mandated by PP No. 29 of 2017, Article 4, paragraph (3), concerning the Method of Payment of Goods and How to Deliver Goods in Export and Import Activities. In this case, the Minister of Trade was given the authority to regulate the method of payment of certain goods.
In this regulation of the Minister of Trade, the principal stipulations are determined, namely the obligation to pay for certain export goods with an L/C, and the obligation to use foreign exchange banks in the country or export financing institutions established by the government.
In addition, other stipulations include the obligation to include the method of L/C payment on Goods Export Notification (PEB), the obligation to submit a stamped statement, the verification obligation by the surveyor, and the obligation to submit an export realisation report completed with the final L/C price.
It is also regulated in relation to price determination, namely the prices listed in the L/C are the same as the world export prices. If it does not exist, the price used will be determined by the government/export destination country.
The supervision of L/C payments will be carried out by the Minister of Trade with the Minister of Finance, the Governor of Bank Indonesia, and related ministries / institutions coordinated by the Minister of Trade.
"This regulation also regulates the suspension of the L/C. For contracts that have been agreed on before the regulation of the Minister of Trade was issued, the contract can be suspended with the provision of approval from the Minister of Trade," Enggar explained.
The exception to the obligation to pay certain export goods with an L/C applies to the sample of goods, research or scientific development goods, and promotion. This regulation of the Minister of Trade was promulgated on September 7, 2018 and will take effect on 7 October 2018.