Govt may proceed with coal export duty plan
Govt may proceed with coal export duty plan
Urip Hudiono and Leony Aurora, The Jakarta Post, Jakarta
Amid rising criticism from industry players towards its recently
imposed 5 percent export duty on coal, the government is mulling
charging the tax only if the commodity's price rises to between
US$50 and $55 a ton.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said on Saturday after a meeting with Coordinating Minister for
the Economy Aburizal Bakrie and Minister of Trade Mari E.
Pangestu, that the government might not impose the export duty
flatly on all coal exports, but only during certain price levels.
"We are still discussing at what exact price level the export
duty will be charged, so that exporters will not suffer losses
from it, while the government can also increase its revenues," he
said.
"But I would say that a range between US$50 and $55 a ton
would be appropriate, considering how the price of coal is
sometimes above that level. And if the price is below that, we
also understand how the additional duty might affect production
costs."
At present, FOB for coal hovers around $40 a ton.
The Ministry of Finance issued a decree on Oct. 11 stipulating
all coal exports be charged a 5 percent duty based on free-on-
board (FOB) prices. The new export duty requires the Ministry of
Trade to create an export reference price, in coordination with
the Ministry of Energy and Mineral Resources.
Meanwhile, Aburizal and Mari said that the exact base price
level for the export duty would be determined after further
discussions over the matter with industry players.
The Indonesian Coal Mining Association had criticized the
export duty policy, arguing how it could deter investments rather
than meet its purpose of generating more revenues and securing a
local supply of coal, suggesting the government to apply a
"domestic market obligation" scheme instead.
Indonesia, which produced some 131 million tons of coal last
year, exports some 70 percent of its coal to Japan, Taiwan, South
Korea, India and China.
Amid rising global coal prices, the association has forecast
the country's coal output of increasing by 19 percent to 155
million tons this year, and 12 percent to 175 million next year.
The association also estimated that domestic demand for coal
will within 20 years increase more than five fold to 194 million
tons per year as the commodity replaces the heavily-subsidized
fuel.
The energy ministry itself is targeting in its road map of
increasing coal usage from 11 percent of the total fuel used to
produce energy at present to 38 percent in 2020.