The Provision on the Use of Letter of Credit For the Export of Specified goods (Regulation of the Director General of International Trade Number 1 Year 2015)

Company Law

exportBackground

On March 30, 2015, Director General of International Trade has promulgated a Regulation of the Director General of International Trade Number 01/DAGLU/PER/3/2015, (“RDG Inter-Trade 1/2015”). RDG Inter-Trade 1/2015 intended to give instructions implementing the method of payment for the export of specified goods by using Letter of Credit.

 

Export of Specified goods

Export of specified goods referred on RDG Inter-Trade 1/2015 are the goods listed in Annex I of  Regulation of Minister of Trade No. 04/M-DAG/PER/1/2015, and divided into four categories, which are (a) minerals, (b) coal, (c) oil and gas, and (d) oil palm (“Specified Goods”). Export for Specified Goods shall use the method of payment by Letter of Credit.

Letter of Credit is a promise of issuer bank to pay recipient if the recipient grants documents in accordance with the letter of credit requirement to the issuer bank (“L/C”).

Payment L/C

  1. Standby Letter of Credit (SLBC) is not included as method of payment of L/C.
  2. The lowest price mentioned in L/C shall be the same as the international market price listed in Annex I to this Regulation.
  3. The price mentioned In L/C shall be counted in accordance with the date when the price is agreed.
  4. In the case of the price being agreed on specified date following the shipment period, the price contained in L/C shall refer to the price as meant in point 2 above.
  5. In the case of Specified Goods not having international market price, the export price shall use the price stipulated by the government (listed in Annex I to this Regulation) or the price in the country of destination of the export.

Obligations of Exporters

Exporters exporting the Specified Goods are obliged to mention the method of payment of L/C at customs notification in the written or electronic form (hereinafter referred to as Export Goods Declaration “EGD”).

Exporters are obliged to submit a statement on a method of payment of L/C. Such statement is addressed to (i) Minister of Trade, in the case the export shall be accompanied by surveyor report; or (ii) Heads of local Customs and Excise Service Offices with a copy made available to the Director General of Customs and Excise, Ministry of Finance and the Director General, in the case the export is not required to have surveyor report.

Exporters are obliged to submit report on the realization of the export accompanied by the final L/C price every month.

Obligations of Surveyors

The surveyors are obliged to examine the data and/or information in the statement made by the exporters and then publish the surveyor report. The surveyor report will be used as a customs document for clearing purposes in the field of export.

Surveyors are obliged to submit report on the recapitulation of the surveyor report every month.

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