Indonesia's trade ministry has issued ministerial decree No. 4/2015 that requires letter of credit (L/C) usage for certain exported goods.

It will affect four primary commodities: coal; palm oil and palm-kernel oil; oil and gas; and minerals, including tin.

Anticipated move

Under the new legislation, which was anticipated at the end of last year (DC World News, 17 December 2014), all exports of the commodities must be made on L/C terms.

Exports on all other terms are prohibited and prices quoted in the L/C documents must reflect the actual transaction value.

Policy aims

This is a re-establishment of a policy requiring L/C usage for international trade that was implemented in 2009 but lifted in 2010.

The policy aims to increase Indonesia's foreign exchange reserves and capture more accurate trade figures.

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