Indonesia’s escrow program ignites paradigm shift in US crabmeat imports

Frozen Crab

Seafood

Indonesia

Regulation & Compliances

Market & Price Trends

Published Jan 24, 2024

Tridge summary

A new Indonesian regulation requiring exporters to deposit 30% of their earnings from cargo valued at over USD 250,000 in a government-controlled bank account for at least three months has negatively affected the country's pasteurized crabmeat exports. Since the rule's implementation in August 2023, Indonesia's share of the global crabmeat export market has dropped from 55% to 45%. The policy is particularly burdensome for smaller companies with limited capital, leading many to consider shipping elsewhere to evade the high costs associated with the escrow rule.

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Original content

A controversial escrow rule put in effect by the government of Indonesia in August 2023 has taken a bite out of the country’s pasteurized crabmeat exports.The regulation requires exporters sending cargo with a value of USD 250,000 (EUR 232,000) or more to deposit at least 30 percent of their earnings in a special bank account controlled by the Indonesian government for a minimum of three months. The government’s justification for the regulation, which took effect on 1 August, is that Indonesian exporters often retain their foreign exchange earnings overseas in order to capitalize on more favorable interest rates and support their international operations, instead of that money funneling back into Indonesian operations.Indonesia had a 55 percent share of the global crabmeat export market in 2020, but that dropped to 45 percent in 2023, partially as a result of the policy, according to Ready Seafood Vice President of Sales Rob Kragh.“It’s an unintended consequence that’s floating ...

Source: Seafoodsource