The Indonesian government has postponed to February 2019 the implementation of a regulation that would have required all Indonesian coal exporters to be covered by a domestic insurance provider from August 1, 2018, industry sources said Friday.
According to the sources, the government decided at a meeting Thursday to give the trade ministry six months to revise the policy. The ministry will issue a formal notification next week.
An Indonesia-based source said mining companies were “hell bent” on fighting the regulation, for it would have added extra costs to shipments on a FOB basis.
“I cannot force the buyers to buy local insurance. It’s not even legal in the international trade market,” he added.
The regulation would have put an amendment into contracts seeking a guarantee from a buyer that they will insure cargoes through the national insurer, and to share transaction details for insurance, an Indonesia-based producer source said.
“It had to be postponed for it was not a practical move as we cannot force our buyers to use any particular insurance if we are selling FOB,” he added.
Ministry officials in Jakarta did not immediately respond to a request for comment.
A Thailand-based trader said he heard from insurance sources that the Indonesian insurance regulation had been deferred until early next year.
“Some of the smaller companies made some changes in their policies in view of the implementation, but the big guys were holding up,” the Indonesia-based source said.
The delay in the regulation’s implementation will be a relief to traders, he added.
“We did intensively inform our customers about the regulation but we did not make any changes in our policies,” an Indonesia-based trader said.
A Singapore-based trader said the postponement of the insurance regulation would benefit buyers as they would incur lower costs.
“If the insurance were to be implemented, our solution would be to find some Chinese insurers in Indonesia or local cooperatives. Perhaps costs would be added by one more layer,” another Singapore-based trader said.
“We have to be careful and follow the developments on the insurance regulation, otherwise it will affect shipments,” he said.
Source: PlattsPrevious Next
Huge Opportunities For Investment in Maritime Sector: Nitin Gadkari
India Shipping and Offshore Summit