There is confusion amongst Indonesia's coal miners as to how new legislation requiring letters of credit (L/Cs) to be used for coal exports will be applied.

As of April 2015, Indonesian exports of four primary commodities: coal; palm oil and palm-kernel oil; oil and gas; and minerals, including tin must be made on L/C terms (DC World News, 16 February 2015).

Clarification sought

The new requirement has led to confusion over whether existing contracts signed earlier this year should also be paid for on L/C terms.

The Indonesian Coal Mining Association has reportedly discussed this issue with the Indonesian trade ministry but the government has yet to clarify this matter.

Transaction terms

Mining companies have asked for an exemption from the new regulation for existing contracts.

This confusion may disturb coal shipments from Indonesia and some miners have complained that the requirement is problematic as their buyers prefer to pay via telegraphic transfers.

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