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Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
 The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulation No. 4/2015 comes into effect from 1 April 2015.
Regulation No. 4/2015 applies to the export of the following prescribed products;
Coal
Unprocessed or partially refined Minerals including;
Iron concentrate | Copper concentrate | Lead concentrate | Zinc concentrate | Alumina | Nickel | Silver | Gold
Crude oil | Liquefied Natural Gas | Crude Palm Oil.
Once in effect, Regulation No. 4/2015 will require Indonesian exporters of the prescribed products to obtain a Letter of Credit from their product buyer for an amount equal to the value of the prescribed products sold prior to the export of the prescribed products.
The Letter of Credit must be received by an Indonesian foreign exchange bank.
The prescribed products cannot be exported without a Letter of Credit in compliance with Regulation No.4/2015.
The Minister shall appoint surveyors to confirm that a Letter of Credit has been received by the Indonesian exporter for the value of the prescribed products sold for the equivalent of (or greater than) the “world price” for the prescribed product. The surveyor shall issue a report which is to be provided to certain government agencies including Bank Indonesia and the Ministry of Finance (but not the Director General of Tax). The prescribed products cannot be exported without the surveyor’s report.
Exporters who do not comply with Regulation No.4/2015 may be subject to sanctions. The sanctions are not specified in Regulation No.4/2015 but may ultimately to suspension or revocation of their export and production licenses for ongoing violations.
Regulation No.4/2015 is subject to further implementing regulations (which have not yet been issued).
The Minister of Trade issued a similar regulation in 2009 (although the range of prescribed products included more agricultural commodities and less minerals and did not include oil & gas). The Minister of Trade revoked the regulation in 2010 stating that at that time, Indonesia’s foreign exchange reserves had improved and the regulation was no longer required.
The stated purpose of Regulation No.4/2015 is to “optimize and accurately record foreign exchange derived from exports while maintaining the stability and improvement of prices of exports”.
Regulation No.4/2015 does not include any transitional provisions so it appears actual export deliveries of prescribed products after 1 April 2015 will need to comply with the Regulation, even though the sales may be subject to a long terms sales contract entered before the enactment of Regulation No.4/2015.
Similarly, Regulation No.4/2015 requires the Letter of Credit to be issued for at least the “world price” of the prescribed product but the Regulation does not define the term “world price”.
One of the major export products subject to Regulation No.4/2015 is coal and the Government of Indonesia has its own “Indonesian Benchmark Price” for coal on which royalty is to be calculated and paid, however, it appears the pricing for coal for the purposes of Regulation No.4/2015 is “world price” and not the “Indonesian Benchmark Price”.
Regulation No.4/2015 also does not recognize that there may be many valid reasons for an exporter selling a prescribed product as less than “world price”. For example, if a buyer makes advance payments to an exporter or if a buyer commits to a long term supply contract with an exporter. (by: Philip Payne | ABNR)
Source: ABNR
About ABNR
ALI BUDIARDJO, NUGROHO, REKSODIPUTRO (ABNR) was founded in 1967 by professionals with a deep respect for the law and a keen interest in assisting clients, both foreign and domestic, to achieve their commercial goals within the Indonesian legal environment.
Ali Budiarjo, Nugroho, Reksodiputro is the exclusive member firm in Indonesia of Lex mundi - the world's leading network of independent law firms with in-depth experience in 100+ countries worldwide.
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Wednesday, 25 March 15
MARKET INSIGHT: TANKER CHARTERING - KATERINA RESTIS
The 1st of January 2015, as broadly reported, denoted the beginning date of new and progressive emission regulations for vessels operating within t ...
Wednesday, 25 March 15
AUSTRALIA SET TO ONCE AGAIN BE THE WORLD'S LARGEST COAL EXPORTER - COAL, MINERALS COUNCIL OF AUSTRALIA
Greg Evans, Executive Director - Coal, Minerals Council of Australia
Media Release: The latest Resources and Energy Quarterly published by the ...
Wednesday, 25 March 15
AUSTRALIA UPSTREAM ENERGY FIRMS FACE RISING OIL PRICE EXPOSURE - FITCH
Fitch Ratings says the Australian oil and gas companies involved in exploration and production face higher exposure to oil price-linked revenues, w ...
Wednesday, 25 March 15
2014 : UK COAL IMPORTS DECLINED 17%; GERMANY COAL IMPORTS UP 6%
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Tuesday, 24 March 15
A WEAK WEEK FOR FOB INDONESIA COAL SWAP
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and week over week.
The Q2 swap fell US$ 2.48 (5.12%) month ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
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- Merrill Lynch Commodities Europe
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- Salva Resources Pvt Ltd - India
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- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
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- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
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- New Zealand Coal & Carbon
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- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
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- Ind-Barath Power Infra Limited - India
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- MS Steel International - UAE
- Larsen & Toubro Limited - India
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- Wilmar Investment Holdings
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- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
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- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
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- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
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- Economic Council, Georgia
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- Thai Mozambique Logistica
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- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Energy Development Corp, Philippines
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- Sinarmas Energy and Mining - Indonesia
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- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
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- Bayan Resources Tbk. - Indonesia
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- Ministry of Finance - Indonesia
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- The University of Queensland
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- Ceylon Electricity Board - Sri Lanka
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- Cement Manufacturers Association - India
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- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
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- Parliament of New Zealand
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- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Australian Coal Association
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
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