Indonesia is once more mulling whether it should introduce letters of credit (L/Cs) for commodity exports.

The Indonesian government has already stalled the move to insist on L/Cs for such commodity sales twice over the last year or so.

Changing circumstances

Indonesia's vice trade minister, Mahendra Siregar, revealed at the recent Coaltrans conference in Bali that the country is still evaluating whether it needs to introduce L/Cs for coal exports.

Coal is one of several commodities contemplated under the new regulation. Other commodities include palm oil, rubber, cocoa, coffee and several metals and minerals.

Delayed implementation

Indonesia issued the regulation insisting on the use of L/Cs for commodity exports in April 2009 as part of its moves to reduce capital outflows.

The ministry of trade, however, postponed the implementation of the regulation on 1 September 2009 and delayed it again on 1 November 2009.

The regulation was intended to support the Indonesian rupiah by ensuring that export revenues are received into the country's own banking system and economy.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.