Freeport Requests Exemption from L/C Regulation on Mineral Export
25 March 2015 08:30 WIB
TEMPO.CO, Jakarta - The Ministry of Finance has said that Freeport Indonesia has once again submitted a request to be excluded from having to use a letter of credit (L/C) as a guarantee for its' mineral exports. The exemption request was revealed by the acting Head of the Sub-Directorate for Revenues of the Directorate General of Customs and Excise, Ferry Ardiyanto, who said that Freeport Indonesia has always been exempted from having to use L/Cs to guarantee its' exports because there were almost never significant uncertainties surrounding their financial transactions.
According to Ferry, Freeport Indonesia has always regularly reported its' export revenues to Bank Indonesia (BI), which have almost always been cleared by the Directorate General of Customs and Excise. "It could be that they requested yet another exemption because they had been exempted from the regulation before," said Ferry at his office on Tuesday, March 24, 2015.
Without having to use L/Cs as a guarantee, Freeport Indonesia could calculate their dues simply by adding up their revenue invoices, which they could simply pay through a telegraphic transfer without the need for a guarantee from a financial institution. "They have submitted an exemption request to the Ministry of Trade. Once their exemption request is approved, we will be notified of the result," said Ferry.
It is known that the Ministry of Trade had issued Decree No. 04/M-DAG/PER/1/2015 on January 5, 2015, which requires exporters from a number of sectors - the majority of which are mineral resources exporters - to use L/Cs to guarantee their transactions in order to increase the accuracy of Indonesia's export revenue projections and reports.
The Directorate General for Foreign Trade, Partogi Pangaribuan, said that Freeport Indonesia is not the only company that has submitted exemption requests to the L/C requirement. "There are around 12 other companies that had made similar request," he said, before adding that the companies range from different sectors - including oil-and-gas exporters, coal miners, mineral extractors, as well as crude palm oil (CPO) and crude palm kernel oil (CPKO) exporters.
The Ministry of Trade, said Partogi, could not single-handedly rule on the objections raised by those companies. "We need to bring this discussion up to the Coordinating Ministry for the Economy," said Partogi.
The aforementioned Trade Ministry's Decree is due to come into effect on April 1, 2015.
An economist for the Institute for Development of Economics and Finance (INDEF), Enny Sri Hartati, said that Freeport’s request to be exempted from such regulation indicates Freeport’s reluctance to support the government’s efforts to increase the accuracy of its’ revenue projection. If the exemption is granted, then not all of Freeport's transactions will be recorded - and as such, the government could potentially lose some of its' income from Freeport's revenue taxation.
"The government needs to take a firmer stance against any similar lobbies made by large corporations," said Hartati to Tempo on Tuesday, March 24, 2015.
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