Jakarta, Feb 24 - Indonesian exporters of key commodities have rejected a government plan making it mandatory to use letters of credit for export payments, a deputy to the chief economic minister said on Monday.
Indonesia wants exporters of coffee, crude palm oil, cocoa, rubber, and mineral products including refined tin, to use letters of credit, with effect from March 5, in a move aimed at protecting the faltering rupiah currency <IDR=>.[nJAK345904]
The government regulation is meant to ensure that revenues from exports are transferred to onshore banks.
"Almost all industry players said they are objecting to the L/C rule," Bayu Krisnamurthi told reporters after a meeting between government officials and industry associations.
Krisnamurthi said that despite the objections raised, the meeting did not result in a decision on whether to delay or cancel the rule.
Indonesia is one of the world's top producers of coffee, rubber, cocoa, tin, nickel and coal. Prices of most commodities have struggled to recover from their recent falls amid weak demand in the global slowdown.
To comply with the rule, exporters can only ship out commodities if they can show the number of the L/C for payment of such shipment, proving that they have been paid in full.
Currently, exporters can just ship out their commodities even if they have received only a small portion of the export contract from buyers.
When asked about the objections to the rule, Trade Minister Mari Pangestu told reporters: "I cannot comment on that right now. Today's meeting only discussed export prospects for this year."
Pangestu said on Feb 14 that export volumes for non-oil and gas are set to fall 20-30 percent this year from 2008 as global trade slows.