Govt to set base price for coal export duty at $50-$55
Urip Hudiono and Leony Aurora The Jakarta Post/Jakarta
Amid rising criticism from industry players of its recently imposed 5 percent export duty on coal, the government may consider taxing it 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 for 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 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, the free-on-board (FOB) price for coal is hovering around $40 a ton.
The Ministry of Finance issued a decree on Oct. 11 stipulating all coal exports be charged a 5 percent rate based on 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 criticized the export duty policy, arguing that it could deter investment rather than achieve its purpose of generating more revenue and securing the local supply of coal. They suggested that the government apply a "domestic market obligation" scheme instead.
Indonesia, which produced some 131 million tons of coal last year, exports some 70 percent of it to Japan, Taiwan, South Korea, India and China.
Amid rising global coal prices, the association has forecast the country's coal output to increase 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, over the next 20 years, increase more than five-fold to 194 million tons per year as the commodity replaces the heavily subsidized kerosene and diesel fuels.
The energy ministry itself is targeting, in its road map, increasing coal usage from 11 percent of the total fuels used to produce energy at present to 38 percent in 2020.