From Bloomberg:
By Yoga Rusmana
June 28 (Bloomberg) — Indonesia, the biggest palm oil producer, canceled rules that required all commodity exporters to use letters of credit for shipments exceeding $1 million, as foreign exchange reserves have increased.
“The existing export policy has been well implemented, which is shown by the increase in foreign exchange reserves,”
the Ministry of Trade said in a website statement dated June 24.
Foreign exchange reserves in Southeast Asia’s biggest economy were $74.59 billion at the end of May, compared with
$69.56 billion in January, Bank Indonesia said June 3.
The rules have been in effect for coal and tin since April
2009 and were set to take effect July 1 for palm oil and rubber, the ministry said. The requirements were introduced amid the financial crisis to ensure capital inflows into the country on concerns that exporters would park their money in overseas banks.
The government postponed the rules three times for agricultural commodities after introducing them last year, following requests from industry groups. The credit rules were meant to ensure that exporters receive payments for commodities sent overseas, boosting the potential for foreign exchange inflows into the country.
Letters of credit are guarantees issued by banks for a customer’s credit and are typically issued for a specific sum and valid for a set period.
To contact the reporter on this story:
Yoga Rusmana in Jakarta at +62-21-2355-3021 or yrusmana@bloomberg.net
To contact the editor responsible for this story:
Clyde Russell at +65-6311-2423 or