Coal body says forced local sales better than taxes

Coal body says forced local sales better than taxes

Leony Aurora, The Jakarta Post, Jakarta

The Association of Indonesian Coal Producers has called on the
government to drop plans to impose export taxes on coal and
instead to apply a "domestic market obligation" to ensure enough
supply of coal.

The association's chairman Jeffry Mulyono said that if
international prices were high, export taxes would not only
prevent producers from selling coal abroad. The measure, he said,
would also encourage smuggling.

"It's better to apply a domestic market obligation, requiring
coal producers to sell let's say at 30 percent to the domestic
market to secure supply," said Jeffry, adding that the
association had submitted a proposal on the matter to the
Ministry of Energy and Mineral Resources.

Prices, however, should be left to businesses to decide and
not be regulated by the government, he warned.

According to previous media reports, the Ministry of Trade is
currently studying the possibility of applying export taxes on
coal. The outcome of the study has not been released.

Indonesia produced some 131 million tons of coal last year, of
which 36 million tons, or 28 percent, was used by local
consumers, mostly comprising of power plants, pulp, steel and
cement companies.

About 70 percent of total production is exported to Japan,
Taiwan, South Korea, India and China, the biggest coal consumer
in the world.

Amid rising global coal prices, it is forecast that coal
output in the country will increase by 19 percent and reach 155
million tons this year.

The association has estimated that within 20 years, domestic
demand for coal will increase more than five fold to 194 million
tons per year as the commodity replaces the heavily-subsidized
fuel.

"The government has to program the yearly increase in
production to reach such an output," said Jeffry.

In a road map drafted by the energy ministry, coal usage is
targeted to rise from 11 percent of the total fuel used to
produce energy at present to 38 percent in 2020.