Indonesia’s trade ministry has postponed for six months the implementation of regulations requiring shipments of coal and crude palm oil to obtain cover from Indonesian insurers.
This is the second time the rules, which were announced in October 2017 and supposed to come into effect on August 01, have been postponed, Reuters reported. Indonesia is one of the world’s top exporters of coal and palm oil.
The rules are part of Indonesia’s push to prop up its shipping industry and to save its foreign currency reserves. According to Trade Ministry spokeswoman Fajarini Puntodewi, the insurance rules would be postponed to February 01, 2019.
Meanwhile, Indonesian Coal Mining Association (ICMA) executive director Hendra Sinadia said that coal buyers and exporters are anxious and confused about how they can adhere to the rules for shipments sold on a free-on-board (FOB) basis, which is how Indonesia exports a vast majority of its coal. Insurance is the responsibility of the buyer with FOB.
Dody Dalimunthe, executive director of the Association of General Insurance Companies of Indonesia (AAUI), said there are currently 73 insurance firms in the country that cover coal and crude palm oil shipments.
“Many companies already use this insurance,” he said.
In January, the Indonesian government said that it expects to produce 485 million tonnes of coal this year, three-quarters of which will be for export. The country’s palm oil exports reached 31 million tonnes in 2017, up 23% from the previous year.
