Indonesian banks are experiencing the pinch, with the ongoing downturn in China resulting in a tough first quarter for the sector.

Indonesia relies on commodity exports for around 60% of its total overseas sales, many of which go to China. With the deflated Chinese property market and efforts to steer the domestic economy away from large scale investment, Indonesia has been affected more than most.

“All banks have had a tough first quarter,” Michael Sugirin, Standard Chartered’s head of transaction banking in the country told delegates at the GTR Indonesia Trade and Commodity Finance Conference in Jakarta today, with deal volumes reported to be down across the board.

As is the case in much of Asia, banks in Indonesia have been re-evaluating their risk profile, as they attempt to adapt to a “new normal” in regional growth. This, according to Ridwan Susanto, head of commodity and structured trade finance, means that there is less new business being booked, with traders having to do more than ever before to obtain credit facilities.

Prices of Indonesia’s core commodities have spent the two years from 2014 in freefall. Last year, crude oil lost 44% of its value, crude palm oil fell by 13% and coal fell by 29%, while rubber dropped 26%. For provinces such as East Kalimantan, Aceh and Riau, this loss in value has hollowed out their export bases.

A poll of those in attendance at the conference said that oil was the biggest concern of the country’s commodities basket, but traders were more pessimistic about the prospects for coal.

In fact, Indonesia is a net importer of oil, since it doesn’t have any refineries. In a roundabout way, it is therefore benefitting from the low prices.

For coal, however, the game appears to be up. Indonesia’s low-grade coal has been struck off China’s list of import demands as the superpower attempts to wean itself of cheap, dirty energy. With India also looking to produce its own coal, it leaves Indonesia with few export options. While domestic demand may help consume some of the surplus, it is bad news for the country’s exports.

Bank Indonesia cut its interbank interest rates earlier this month for the third time this year in a bid to galvanise the flow of capital. And while the tail-end of 2015 enjoyed an upturn in GDP growth due to government investment in infrastructure, the overall picture is one of decline – with few sectors expected to perform well over the coming years.

The ever-changing regulatory environment in the country has also been a factor in the tightening of the purse strings. International banks are facing capital holding requirements, while the regulation around letters of credit are making it too expensive for many small commodity players to utilise banking facilities.

On April 1 last year a law requiring exporters of key commodities to use letters of credit in their shipments as a means of keeping an accurate track of exports. The affected commodities are coal, palm oil and palm-kernel oil, and oil and gas and minerals, including tin. These, combined, account for some 41% of the country’s exports.

While the government has since pledged to show some flexibility, Susanto says it has led to very little additional business for HSBC, while traders speaking at the conference say it is yet another obstacle in obtaining finance.

From insurers to traders the bankers, the consensus is that the first quarter of 2016 was miserable for Indonesian trade.