Can my Indonesian company export machine parts if the end user may be in a sanctioned country?

All business transactions, including exports and imports, should be made in a clear agreement that includes product specifications, compensation mechanisms in case of damage or noncompliance, and so on so that all parties are legally protected.

In principle, any business transaction should be properly governed by a written agreement. Such an agreement should clearly regulate the key aspects of the transaction, including the payment model, the goods being sold, and the respective interests and obligations of each party.

By setting out these essential terms in a formal contract, you can ensure greater legal certainty and protection, thereby minimizing potential risks and safeguarding your business activities.

Thank you for your inquiry.

In principle, an Indonesian company may export machine parts; however, the situation you described raises significant sanctions and export control risks, particularly due to the lack of clarity regarding the final end user and destination.

From a compliance perspective, this is considered a high-risk transaction. Even if Indonesian regulations may not directly prohibit the export, exposure to international sanctions regimes (including U.S., EU, or UN sanctions) may still arise, especially where financial transactions, logistics, or counterparties involve global systems.

Before proceeding, we strongly recommend implementing the following measures:

- Conduct comprehensive sanctions screening on the buyer and related parties.
- Obtain a formal End-User Statement clearly identifying the final user and destination country.
- Verify the intended use of the goods to ensure no restricted or prohibited applications.
- Review the shipping route and logistics arrangements to detect any potential diversion risks.
- Ensure that payment is processed through reputable and compliant banking channels.

In addition, the contract should include robust protections, such as:

- Sanctions compliance representations and warranties
- Restrictions on resale, re-export, or transfer to sanctioned parties or jurisdictions
- No-diversion obligations
- Indemnification provisions
- Rights to suspend or terminate the transaction if compliance concerns arise

If the buyer is unwilling or unable to provide clear and verifiable information regarding the end user and destination, it would be prudent to suspend or decline the transaction to mitigate potential legal and financial exposure.

Please let us know if you would like us to assist in preparing the necessary contractual clauses or conducting due diligence checks.

Best regards,
RAMANDA FIRM