Do you know...
Do you know...
Under current regulations, mining companies must pay the
government royalties of 13.5 percent from coal production, and
2.5 percent of net profits from gold and copper mining
operations.
The mining companies are also required to pay land rent of
about US$2 per hectare and various taxes including property tax
and income tax of between 30 percent and 35 percent. In addition,
they have to pay a 10 percent value added tax and import duties,
and 7.5 percent tax dividends.
Government regulation No. 344/KMK.06/2001 on the distribution
of state income from natural resources-based companies, clearly
states that 80 percent of revenue from royalties and land rent
will be allocated to local governments, and the remaining 20
percent to the central government.
Of the 80 percent of land rents paid to local governments, 16
percent goes to the provincial administration and the remaining
64 percent to the regency administration where the mining
companies are located.
The distribution of the local government's revenue from mining
royalties is slightly different from that of land rent. The
provincial administration receives 16 percent and the regency
where the mining companies are located gets 32 percent. The
remaining 32 percent is equally distributed among other regencies
and municipalities in the province. In addition to this revenue,
local governments also receive part of the property taxes paid by
mining companies.
The total payment mining companies are required to make to the
government is among the highest in the world. But local
governments, especially in regencies where the mining companies
operate, cannot fully enjoy the benefit of the mining
operations in their areas.
One of the problems is related to the transfer of royalty
payments to the local governments' accounts. Because all of the
royalties and land rents are paid through the central government,
there is often a delay in the transfer of the money to local
governments. Besides this delay, which in some cases can take up
to a year, local governments often complain that the money they
receive is smaller than it should be.
It is also difficult for local governments to check the amount
of royalties and land rent paid by a mining company to the
central government because of a lack of transparency in the
operations of many mining companies.
A more worrying problem is that many coal mining companies,
especially those located in East Kalimantan, have withheld
royalties, claiming local governments have failed to stop illegal
mining in their concession areas. Although the companies
eventually agreed to fulfill their financial obligations, the
payments are often very late, causing financial difficulties for
the regencies, which rely on mining activities to fill the gaps
in their budgets.
The sad fact is that people often blame mining companies
whenever there is a problem in their operations. It is easy to
accuse the companies of causing environmental damage, ignoring
all the benefits they provide to local economies. --Hendarsyah
Tarmizi