Indonesia delays trade rules on export payments

* Rule on export payment still needs adjustments

* Rule implementation delayed to July 1, 2010

JAKARTA, Nov 3 - Indonesia has delayed for the third time the introduction of a new trade regulation covering payments for exports until July 1, 2010, after meeting opposition from exporters, the trade ministry said on Tuesday.

The ministry said the regulation, which makes it mandatory to use letters of credit for export payments, still needed some adjustments but gave no further details.

The regulation, which was issued in April, was part of moves to reduce capital outflows and aimed at bolstering the rupiah currency <IDR=> by ensuring that revenue from exports of commodities including palm oil, rubber, cocoa, coffee and mining products are kept onshore.

Exporters have strongly opposed the regulation on fears that mandatory use of letter of credits could scare away buyers who prefer other payment methods. [ID:nJAK479754]

The ministry had previously postponed the implementation of the regulation to Sept. 1, before delaying it again to Nov. 1 after the first postponment expired.

"The industry and export related institutions are not ready to implement the rule. More guidelines must be in place first to avoid confusion," Halim Abdul Razak, chairman of the Indonesian Cocoa Association (Askindo), told Reuters.

He said the regulation, which requires any single export shipment worth a minimum of $1 million to use a letter of credit, provided a loophole for exporters to split their shipments into smaller values.

Indonesia is the world's top producer of palm oil, as well as a major producer of cocoa, coffee and tin.

The government is concerned that exporters do not repatriate export revenue and instead keep the money offshore.