INTERNATIONAL TRADE

Course 3 Yudy Yunardy S.E., M.M.

WHO AM I ?

Fifteen years of Banking experience, six years’ experience in Trade Finance Operations background with Unsecured Loan experience, equipped with another seven years’ experience in Management Information Analyst and Dashboard Reporting. Vastly experienced in Bank Indonesia reporting (LBU, SID, LBBU, BMPK etc.)

EMPLOYMENT SUMMARY

2014 Present Indonesia Banking School

2013 2014 Deutschebank AG

2011 2012 Misys Plc

2010 2011 DBS Indonesia

2010 2010 ANZ Bank

2005 2010 RBS Bank

2004 2005 Vendor at Bank Mandiri, BCA and Circle K

1999 2004 HSBC Bank

1998 1999 MetLife Insurance

1997 1998 Demographic Institution FEUI

1996 1997 Private Investment Manager

RULES

1.Disable your comm. device2.Presence 80% minimum3.Time alloc. 08.00 – 10.30

TEXTBOOK

Koch, Timothy (2015), Bank Management, The Dryden Press

GRADING EVALUATION

1. Participation 5%2. Quiz / exercise 10%3. Assignment 15%4. Midterm 35%5. Final 35%

LAST WEEK’S QUESTION

Answer

LAST WEEK’S ASSIGNMENT

Answer• E-commerce will be booming in 2015, because

of bigger mobile device trends, always connected to internet, the battle to win customer loyalty will force us to engage in B2B as well as B2C

• Social media makes it easy to become a seller in facebook, wordpress, tumblr or site that will focus solely on shopping

• Analytical engine will become more intrusive but also more accurate in predicting our needs and wants

LAST WEEK’S ASSIGNMENT

in billion do llars 2012 2013

A gricultural pro ducts 1,647.65 1,744.83

F uels and mining pro ducts 4,128.61 3,996.98

M anufactures 11,467.50 11,848.00

A gricultural pro ducts (A o A ) a 1,371.37 1,450.26

N o n-agricultural go o ds (N A M A ) 16,585.50 16,850.38

T o tal Wo rld M erchandise Expo rt 18,615.13 19,040.07

B 2C Sales wo rldwide 1,058.00 1,233.00

Percentage to to tal world merchandise export 5.68% 6.48%

Percentage to NAM A world export 6.38% 7.32%

Percentage to fuel and mining world export 25.63% 30.85%

Percentage to clo thing world export 252.38% 267.89%

Value

PREVIOUSLY…

LC CONCEPTS

ADVISING BANK

The bank in the seller’s country which is requested by issuing bank to notify the LC to beneficiary

APPLICANT

Issuer, a party whose request a bank is to issue an LC (importer/ buyer)

BENEFICIARY

The party in whose favour the LC is to be issued and the party who must comply with the T&C of the LC in order to be entitled to receive its proceeds (seller/exporter)

ISSUING BANK

Bank that issues LC at the request of applicant

TERMINOLOGY

NEGOTIATING BANK

Bank that negotiates or discounts the beneficiary’s BoE

PAYING BANK

Bank that makes payment to beneficiary against presentation of stipulated documents

REIMBURSING BANK

Bank nominated by the issuing bank to pay claims under the LC to the negotiating or paying bank

BILL OF EXCHANGE

A written, unconditional order by one party (the drawer) to another (the drawee) to pay a certain sum, either immediately (a sight bill) or on a fixed date (a term bill), for payment of goods and/or services received

TERMINOLOGY

TRADE CYCLE - SIGHT

ISS.BANK

IMPORTER

ADV.BANK

EXPORTER

S C

4. Goods

1. Apply

LC

9. Uang

10. Docs

7. Uang

2. Issued LC

6. Docs

8. Uang

5. Doc’s

3. A

dvis

e L

C

TRADE CYCLE - USANCE

ISS.BANK

IMPORTER

ADV.BANK

EXPORTER

S C

4. Goods

1. Apply

LC 1

0. U

ang

9. D

ocs

11. Uang

2. Issued LC

6. Docs

12. Uang

5. D

oc’s

3. A

dvis

e L

C

7. Acceptance

8. Accepta

nce

TYPES OF LC

1. Revocable vs Irrevocable LC2. Sight vs Usance LC3. Confirm vs unconfirm LC4. Resticted vs unrestricted LC5. Transferable LC

TYPES OF LC

6. Back to Back LC7. Revolving LC8. Standby LC9. Red Clause & Green Clause

LC

TYPES OF LC

DOCUMENTS IN LC

Transport Document

• Marine Bill of Lading

• Airway Bill

• Freight Forwarders

• Delivery Order

Commercial Documents

• Invoice

• Packing List

• Insurance

• Certificate of Origin

• Certificate of Analysis

Official Documents

Certificate of Origin

Health Certificate

Consular Invoice

Legalised Invoice

Financial Documents

Bills of Exchange

Promissory Note

DOCUMENTS IN LC

DOCUMENTS - TITLEBills of Lading

• A receipt for goods, a contract for carriage and a document of title

• Issued by Carrier or his agent and bears evidence that goods have

actually been loaded on board a named vessel

• Issued in several originals (as a set), but only one is sufficient to take

possession of goods

• BL can be consigned to issuing bank, applicant, or to order• The consignor can then transfer it by endorsement

• If it is to order, it becomes a bearer instrument.

• Clean BL = It does not bear any clause/endorsement indicating

defective condition of the cargo or its packaging

DOCUMENTS – ‘NOT’ TITLEDelivery Order

Airway Bills

Non-negotiable B/L

Original B/L sent directly to buyer :

- consigned to order

- consigned to buyer

Freight Forwarders Receipt

DOCUMENTS – DRAFT

DOCUMENTS – INVOICE

DOCUMENTS – PACKING LIST

LET’S TAKE A LOOK AT LC

SAMPLE OF LC

MT 700

SENDER: ABC BANK, MELBOURNE, AUSTRALIA

RECEIVER: IOB, MUMBAI, INDIA

:27: SEQUENCE OF TOTAL 1/1

:40A: FORM OF DOCUMENTARY CREDIT IRREVOCABLE TRANSFERABLE

:20: DOCUMENTARY CREDIT NUMBER EL20088033319

:31C: DATE OF ISSUE 150105

:40E: APPLICABLE RULES UCP LATEST VERSION

:31D: DATE AND PLACE OF EXPIRY 150609 OPENING BANKS COUNTERS

:50: APPLICANT HOT AND SPICY PTE LTD

240 YARROWEE STREET

SEBASTOPOL

VICTORIA, AUSTRALIA 3356

SAMPLE OF LC

:59: BENEFICIARY AACHI MASALA PTY LTD

41, NORTH CAR STREET,

CHENNAI, INDIA-600007

:32B: CURRENCY CODE, AMOUNT AUD 60,000.00

:41D: AVAILABLE WITH ANY BANK BY NEGOTIATION

:42C: DRAFT AT SIGHT

:42A: DRAWEE ABC BANK, MELBOURNE, AUSTRALIA

:43P: PARTIAL SHIPMENTS NOT ALLOWED

:43T: TRANSHIPMENTS ALLOWED

:44E: PORT OF LOADING ANY INDIAN PORT

:44F: PORT OF DISCHARGE ANY AUSTRALIAN PORT

:44C: LATEST SHIPMENT DATE 150525

SAMPLE OF LC

:45A: DESCRIPTION OF GOODS MANGO PICKLE, GARLIC PICKLE,

SAMBAR POWDER, RASAM POWDER,

DHAL POWDER AS PER PERFORMA

INVOICE NO 123456.

CFR AUSTRALIA

:46A: DOCUMENTS REQUIRED

1. SIGNED COMMERCIAL INVOICE

2. 3/3 CLEAN ON BOARD BL MADE OUT TO ORDER OF ABC BANK AND MARKED FREIGHT PREPAID EVIDENCEING NOTIFY PARTY AS APPLICANT.

3. CERTIFICATE OF ORIGIN ISSUED BY LOCAL CHAMBER OF COMMERCE

SAMPLE OF LC

:47A: ADDITIONAL CONDITIONS

1. A COPY OF ALL DOCUMENTS TO BE SENT TO APPLICANT WITHIN 5 DAYS AFTER SHIPMENT DATE

2. THIRD PARTY DOCUMENTS ACCEPTABLE

3. ALL DOCUMENTS TO BE FORWARDED TO ABC BANK, MELBOURNE, AUSTRALIA IN TWO LOTS BY BLUE DART COURIERS.

4. CHARGES ADDITIONAL TO FREIGHT NOT ACCEPTABLE

5. THIS LC IS TRANSFERRABLE BY INDIAN OVERSEAS BANK, TIRUNELVELI, INDIA

:71B: CHARGES ALL BANK COMMISSIONS AND CHARGES OUTSIDE AUSTRALIA, PLUS

ADVISING AND REIMBURSING COMMISSIONS, ARE FOR THE ACCOUNT OF THE

BENEFICIARY.

:48: PERIOD FOR PRESENTATION DOCUMENTS TO BE PRESENTED WITHIN 15 DAYS AFTER THE DATE OF SHIPMENT BUT WITHIN THE CREDIT VALIDITY.

:49: CONFIRMATION INSTRUCTIONS WITHOUT

:57A: ADVISE THROUGH BANK INDIAN OVERSEAS BANK, TIRUNELVELI, INDIA

EXERCISE

MT 700

SENDER: ABC BANK, MELBOURNE, AUSTRALIA

RECEIVER: IOB, MUMBAI, INDIA

:27: SEQUENCE OF TOTAL 1/1

:40A: FORM OF DOCUMENTARY CREDIT IRREVOCABLE TRANSFERABLE

:20: DOCUMENTARY CREDIT NUMBER EL20088033319

:31C: DATE OF ISSUE 150609

:40E: APPLICABLE RULES UCP LATEST VERSION

:31D: DATE AND PLACE OF EXPIRY 150105 OPENING BANKS COUNTERS

:50: APPLICANT HOT AND SPICY PTE LTD

240 YARROWEE STREET

SEBASTOPOL

VICTORIA, AUSTRALIA 3356

EXERCISE

:59: BENEFICIARY AACHI MASALA PTY LTD

41, NORTH CAR STREET,

CHENNAI, INDIA-600007

:32B: CURRENCY CODE, AMOUNT AUD 60,000.00

:41D: AVAILABLE WITH ANY BANK BY NEGOTIATION

:42C: DRAFT AT SIGHT

:42A: DRAWEE ABC BANK, MELBOURNE, AUSTRALIA

:43P: PARTIAL SHIPMENTS NOT ALLOWED

:43T: TRANSHIPMENTS NOT ALLOWED

:44E: PORT OF LOADING ANY INDIAN PORT

:44F: PORT OF DISCHARGE ANY INDONESIAN PORT

:44C: LATEST SHIPMENT DATE 150525

EXERCISE

:45A: DESCRIPTION OF GOODS CUTE 15 YEARS OLD GIRLS, RPG,

FLAMETHROWER, M-16, AR-15,

KALASHNIKOV AK-47,

INVOICE NO 123456.

CIF AUSTRALIA

:46A: DOCUMENTS REQUIRED

1. SIGNED COMMERCIAL INVOICE

2. 3/3 CLEAN ON BOARD BL MADE OUT TO ORDER OF ABC BANK AND MARKED FREIGHT PREPAID EVIDENCEING NOTIFY PARTY AS APPLICANT.

3. CERTIFICATE OF ORIGIN ISSUED BY LOCAL CHAMBER OF COMMERCE