Adaro

Source: Bloomberg

By Yoga Rusmana and Fitri Wulandari

April 4 (Bloomberg) — Indonesia isn’t formally discussing a suggestion from the Industry Ministry to tax exports of coal and minerals, according to government and industry officials.

The Industry Ministry suggestion for a tax hasn’t been officially proposed to the cabinet, Harya Adityawarman, secretary at the Directorate General of Coal and Minerals at the Energy and Mineral Resources Ministry, told reporters today in Jakarta.

“We welcome the idea, but it’s still too premature to say that there’s a plan” to impose a tax, Adityawarman said. “The proposal for such policy must come from our ministry, because that’s our domain, and we haven’t formally suggested it.”

Indonesia, the world’s largest exporter of tin and thermal- coal, plans stop those holding mining-business licenses from exporting raw minerals including bauxite, nickel and iron ore in May as a way to reserve supplies for domestic use. Reuters reported yesterday that the country is planning to tax coal and mineral exports. The Supreme Court ordered the government in September 2006 to revoke a 5 percent duty on coal exports imposed a year earlier because it contradicts other laws and the government’s contracts with coal miners.

“For now, we will focus more in ensuring that the mineral- export ban in May is going well,” Adityawarman said.

Deddy Saleh, director general of foreign trade at the Trade Ministry, said a tax on coal exports isn’t being discussed. Budi Irmawan, director of base-metal industry at the industry ministry, said the government has made no decision on the tax rates and that the idea was based on industry input.

Conflicting Laws

“The tax “is an option, but we have to see whether the policy is conflicting with the mining law,” Deputy Trade Minister Bayu Krisnamurthi told reporters. The immediate policy “is to ban ore exports, and not by imposing an export tariff,” he said.

An export tax wouldn’t affect major miners such as PT Bumi Resources, PT Adaro Energy, and PT Berau Coal Energy because their contracts may shield them from additional taxes introduced after the agreements were signed, according to Supriatna Suhala, executive director at the Indonesian Coal Association.

“Production from miners that hold this kind of contracts account for 70 percent of Indonesia’s coal output,” Suhala said.

“If it’s implemented, the tax would only affect 30 percent of our production.”

The government needs to renegotiate their contracts and change the tax structure to apply the tax to all players, he said. Indonesia plans to produce 340 million tons of coal this year, Adityawarman said on March 19.

For Related News and Information:

Indonesia Says Report of Tax for Coal Exports Is ‘Premature’