Mandatory Use of Letter of Credit for Export of Certain Goods

Ministry of Trade Regulation No. 04/M-DAG/PER/1/2015 & No. 26/M-DAG/PER/3/2015

Ministry of Trade of the Republic of Indonesia enacted two regulations requiring export of certain goods to
use letter of credit (“L/C”) as a mode of payment under Ministry of Trade Regulation No. 04/M-
DAG/PER/1/2015 on Provisions of Use of Letter of Credit for Export of Certain Goods, and Ministry of Trade
Regulation No. 26/M-DAG/PER/3/2015 on Special Provisions of Use of Letter of Credit for Export of Certain
Goods, which regulations both are effective as of 1 April 2015 (“Regulation”).

The main provisions under this Regulation are summarized as follows:

1. Export on Certain Goods shall use L/C as mode of payment. Export of Certain Goods which are not
in compliance with this Regulation are not allowed to be exported.

“Certain Goods” under this Regulation include:

(a) minerals of certain calories and/or specifications;

(b) coals;

(c) oil and gas (crude oil, condensate, LNG, CNG, and Vacuum residue);

(d) CPO and CPKO.

2. L/C under this Regulation does not include Standby Letter of Credit (SLBC).

3. The price of Certain Goods stipulated in the L/C shall be at least equal to the applicable market price.
In the event the L/C issued is less than the market price for such Certain Goods, the export of such
Certain Goods are deemed to be not in compliance with this Regulation.

References for market price for Certain Goods are as follows:

Minerals of certain calories and/or (a) Asian Metal;

specifications. (b) London Metal Exchange;
(c) London Bullion Market Association;
(d) Comex;
(e) Indonesian Commodity & Derivatives
Exchange;
(f) Harga Patokan Ekspor; or
(g) Harga Patokan Mineral.

Coals (a) Indonesia Coal Index;

(b) Platts;
(c) New Castle Export Index;
(d) New Castle Global Coal Index;
(e) Harga Batubara Acuan; or
(f) Harga Patokan Batubara.

Oil and gas (crude oil, condensate, LNG, CNG, (a) RIM;
and Vacuum residue) (b) Platts; or
(c) Indonesia Crude Price.

CPO and CPKO (a) Bursa Indonesia;

(b) Bursa Malaysia;
(c) Bursa Rotterdam; or
(d) Harga Patokan Ekspor.
4. Payment of such L/C shall be received in a Foreign Exchange Bank in Indonesia. “Foreign Exchange
Bank” means a bank in Indonesia which are licensed to conduct foreign exchange activities.

5. Payment of L/C through bank other than Foreign Exchange Bank in Indonesia is allowed through an
export financing institution incorporated by the Government.

6. In the event an exporter is not yet able to use L/C in its export activities, such exporter may apply for
a temporary exemption to this mandatory use of L/C, which application shall be submitted to the
Ministry of Trade.

7. Ministry of Trade may grant such exemption based on the following considerations:

(a) contract between an exporter and a buyer outside Indonesia with regard to export of Certain
Goods has set out different mode of payment, and such contract were made before the
enactment of the Regulation;

(b) the ability of an exporter to use L/C as mode of payment within the certain period of time; and

(c) a statement signed by an exporter with sufficient stamp duty (materai) that it will be able to adjust
to use L/C as its mode of payment.