Indonesia has scrapped a proposed regulation that would have required traders to use letters of credit (L/Cs) for commodity exports.

The ministry of trade officially cancelled the regulation on 28th June after more than a year of repeatedly delaying its implementation.

Delays

The Indonesian government passed the new regulation into law in April 2009.

But soon after it proposed the new L/C requirement, the government was forced to delay its introduction due to resistance from Indonesia's trading community (DC World News, 18 May 2009).

Arguments

Exporters opposed the regulation, arguing that compulsory L/C usage would deter buyers who would find suppliers in other countries able to offer a variety of payment terms.

Indonesia is the world's leading thermal coal exporter and the biggest palm oil producer. The country also exports substantial amounts of coffee and rubber.

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