Enviro News Asia, Jakarta – The government is being urged to offer low-interest usance LC (Letter of Credit) facilities to stimulate exports of leading manufactured products, such as pulp, textiles, and footwear.
“The government should consider providing usance LC facilities, with interest rates preferably below one percent—no higher—to drive exports,” said community economic observer Rusli Tan in Jakarta on Tuesday (April 8, 2025).
Usance LC is an export financing facility that allows importers to pay their obligations to exporters within a certain period of time.
Rusli Tan explained that the global market is currently a battleground for producers from various countries, while demand has not seen significant growth due to the impacts of economic and geopolitical crises.
“Therefore, there is no other way—the government must be creative in boosting exports,” he stated.
According to Rusli, the usance LC facility can be used to accelerate exports of Indonesia’s key products and attract foreign exchange inflows. These include pulp, garments, and footwear—industries that are labor-intensive.
“Providing usance LC facilities is one way to help our garment and footwear products remain competitive,” he said.
Rusli emphasized that invigorating exports from labor-intensive industries is crucial for job absorption. Indonesia’s open unemployment rate has reached 7 million people and could rise to 10 million.
Hence, efforts to boost exports will help absorb labor and support the people’s economy. If industries are able to operate through exports, many multiplier effects will follow—workers using online ride-hailing services, food stalls serving meals to employees, and more.
“If domestic consumption can also be increased, demand for packaging paper will rise, ultimately boosting the paper industry as well,” Rusli added.
He noted that usance LC policies were once implemented for national pulp commodities during the tenure of Finance Minister J.B. Sumarlin in the 1992–1993 period, producing extraordinary positive impacts.
He believes that usance LC incentives are more attractive and effective for buyers compared to offering tax holidays. *
