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December 9, 2008

Indonesia: Central bank’s new rule to facilitate exports
Indonesia's central bank said it has introduced a new rule enabling exporters to receive payment faster, in an attempt to reduce the impact of a global credit crunch on Southeast Asia's biggest economy, reported Reuters.

Indonesia depends on exports of commodities including coal, oil, and palm oil, as well as of manufactured goods ranging from toys to textiles.

Some companies have already complained about the difficulty of obtaining financing, while monthly exports have dropped significantly because of the global financial crisis.

Under the new rule, commercial banks are allowed to sell export receivables -- the monies owed to an exporter by the importer -- to the central bank, which will in turn extend the proceeds to the original exporter.

This should reduce the time it takes for an exporter to receive payment, which typically can be as long as six months, and may help to reduce demand for foreign currencies, reducing the selling pressure on the rupiah currency.

"Exporters, through the banks, will receive exports proceeds faster to meet working capital needs rather than having to wait for the payment date from overseas buyers," Bank Indonesia said on its website,

Exporters can have liquidity "both in foreign exchange and in rupiah, thus reducing pressure on the rupiah exchange rate," Central Bank Governor Boediono said in a statement, adding that this should be positive for the economy.

Bank Indonesia has been trying to shore up the struggling rupiah, which has lost about one fifth of its value against the dollar this year as investors rushed to sell emerging market assets.

The new regulation came into effect on December 5 and is eligible for six foreign currencies -- the US dollar, yen, pound sterling, euro, Australian dollar, and Swiss Franc.

A central bank official said a similar regulation was put into effect during the 1997-98 Asian financial crisis.

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