Jakarta, TAMBANG - The government\u2019s plan to increase mining royalty\nrates starting in June 2026 has come under scrutiny amidst the current\nslowdown in the mining sector and increased investor sensitivity towards\nlong-term policy certainty. The policy needs to be carefully reviewed to\navoid putting pressure on the investment climate and the sustainability\nof the national mineral and coal industries.<\/p>\n
Edi Permadi, a professional at the National Institute of Defence\nStudies (Lemhannas RI), believes that the royalty increase has the\npotential to increase non-tax state revenue (PNBP) in the short term.\nHowever, he argues that the policy also carries significant economic\nrisks if implemented when the industry is under pressure.<\/p>\n
\u201cThe main problem is not simply whether or not the royalty increases,\nbut what happens after the revenue enters the state treasury. Without a\nmechanism to ensure that resource rent funds are channeled into\nproductive investment, the royalty increase could become a short-term\nfiscal solution with medium-term economic costs,\u201d said Edi in a\nstatement, quoted on Saturday (16\/5).<\/p>\n
He explained that Indonesia\u2019s current royalty rates are already\nrelatively high compared to many other mining-producing countries. For\nnickel commodities, for example, the royalty rate for ore is already in\nthe range of 14-19 percent. This situation is considered to limit the\nroom for increasing rates without disrupting the sector\u2019s economy.<\/p>\n
On the other hand, the mining industry is also facing pressure from\nfalling global commodity prices, rising operational costs, and market\nuncertainty. Edi believes that the recent response in the stock market\nis a signal of increasing policy risk in the mining sector.<\/p>\n
\u201cThis market response is not just a short-term speculative reaction,\nbut a signal of increasing policy risk in the midst of a weakening\nsector,\u201d he said.<\/p>\n
Edi also reminded that the main challenge for resource-rich countries\nis not only to collect more revenue, but to transform it into\nsustainable long-term investment. He believes that regulatory certainty\nis essential to maintain investment in downstream industries, job\ncreation, and the attractiveness of foreign direct investment in\nIndonesia.<\/p>\n
\u201cSustainable long-term investment needs to be carefully maintained in\norder to attract other sustainable investment to enter Indonesia,\u201d he\nconcluded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/planned-royalty-increase-deemed-risky-amidst-slowdown-in-mining-industry-1780597583", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }