Indonesia set rules for commodity exports, protects currency

JAKARTA-
Indonesia will require commodities exporters to use letters of credit issued by local banks in future, to make sure that foreign exchange remains onshore, the trade minister said on Friday (9/1).
Indonesia has taken several steps to try to reduce capital outflows and lessen the impact of a world economic crisis.
The latest moves would force exporters to keep the foreign currency proceeds with a bank onshore, where the money would be subject to restrictions such as how much can be converted and transferred offshore.
"The regulation aims at keeping the flow of foreign exchange revenue fast and smooth," said Trade Minister Mari Pangestu.
Exporters of coffee, crude palm oil, cocoa, rubber and mineral products, including refined tin, must use letters of credit starting from March 5, the minister said.
"Letter of credit proceeds must go through and must be received by onshore banks," Pangestu told reporters.
"The requirement will also guarantee that exporters receive payment from buyers," she said, referring to cases where buyers have refused to pay on the arrival of a shipment because the commodity price has fallen.
Indonesia is one of the world's main producers of palm oil, rubber, coffee, cocoa, tin, nickel and coal. Prices for commodities including crude palm oil and tin have tumbled from their peaks due to weaker demand.
Many Indonesian exporters have cancelled shipments of commodities, including palm oil and rubber, after buyers failed to pay up because of the sliding in prices.