18 October, 2018
Latest amendment
On 28 September 2018, the Indonesian Minister of Trade issued Regulation Number 102 of 2018 ("MTR 102"), amending the list of commodities which are subject to the letter of credit requirements under Minister of Trade Regulation Number 94 of 2018 ("MTR 94").
MTR 102, which will come into effect on 7 October 2018, importantly removes LNG, crude oil, and condensate as well as propane and butane from the list of commodities that are subject to the L/C Obligation (defined below).
Background
MTR 94 had replaced the list of commodities which were subject to the L/C Obligation pursuant to Minister of Trade Regulation Number 4 of 2015 and its amendments ("MTR 4") and re-introduced the L/C Obligation for oil and gas commodities such as LNG, crude oil and condensate as well as propane and butane.
MTR 4, which came into effect on 1 April 2015, required that exports of certain commodities from Indonesia be paid for by way of a letter of credit and that the proceeds of the letter of credit be paid into an account with a foreign exchange bank located in Indonesia ("L/C Obligation").
Please click on these links to access our previous briefing on MTR 4 and MTR 94 published in February 2015, April 2015, September 2015 and September 2018.
Commentary
After the issuance of MTR 94 on 7 September 2018, the Ministry of Energy and Mineral Resources, Ignasius Jonan, made public statements about the Ministry of Energy's disapproval of the re-inclusion of oil and gas commodities in the list of commodities that are subject to the L/C Obligation, and had insisted that the Ministry of Trade make an exception for oil and gas commodities. MTR 102 seems to be the Ministry of Trade's response to objections raised by the Ministry of Energy and Mineral Resources (as well as push-back received from the industry).
For further information, please contact:
Daniel Reinbott, Partner, Ashurst
daniel.reinbott@ashurst.com
