Application of FOB (Free on Board) Incoterms 2020 in Export Activities of Processed Coconut Products

Abstract

Export activities in Indonesia are a major factor in the country's economic growth. In 2022, Cumulatively, Indonesia's export value reached US$291.98 billion, up 26.07 percent compared to 2021. Meanwhile, non-oil and gas exports reached US$275.96 billion, an increase of 25.80 percent, so export activities in Indonesia are still a significant factor in the country's economic growth. To regulate export activities that use sea transportation, exporters and importers must pay attention to the trade agreement contained in the International Commercial Terms (Incoterms) 2020; one of the terms is Free on Board (FOB). This study aims to find out how the value of FOB terms is more in the export of goods, especially in processed coconut products. The research method is descriptive qualitative with a structured interview method questionnaire with a rating scale method. The results of the study show that for exporting companies engaged in processed coconut products, FOB terms are most often used with an interval value of 37/40, or in another sense, FOB terms are the most frequently used terms in processed coconut product exporting companies. The advantage of using the FOB term for exporters is that they have responsibility until the cargo arrives on the ship and do not bear shipping costs, so freight fluctuations are avoided. It is the safest for exporters because importers must first open a Letter of Credit (L/C) as collateral and basis for export activities.