Indonesia imposes export tax on 65 mineral categories

The Business Desk in Jakarta/The Jakarta Post

Jakarta (The Jakarta Post/ANN) - Indonesia's Finance Ministry has expanded a 20 per cent export tax to 65 mineral categories from only 14 proposed earlier this month, but coal is exempt from the new tax policy.

"Today, the government has officially issued an export tax regulation on 65 mineral categories," Finance Minister Agus Martowardojo announced during a press conference at the Sahid Jaya Hotel in Sudirman, Central Jakarta on Wednesday.

"The 65 mineral categories consist of 21 metal ores, 10 non-metal ores and 34 rock sediment ore ... On average, they are subject to a 20 per cent export tax," he added.

Previously, the government planned to impose the tax on only 14 mineral ores.

The 14 mineral commodities that were earlier proposed were antimony, bauxite, chromium, copper, gold, iron ore, iron sand, lead, manganese, molybdenum, nickel, platinum, silver and tin.

The government expects to receive at least US$2 billion from the export tax. Annual ore exports are worth around $10 billion.

Meanwhile, the Finance Ministry's fiscal policy interim head, Bambang Brodjonegoro, said the government's decision to expand the regulation's scope to 65 commodities was based on non-discrimination.

"All of the commodities are raw ore. So, we do not want to differentiate any commodity that is considered as ore," he said.

Bambang said the regulation would assist the government in properly listing and managing

mining export performance in Indonesia.

The regulation also stipulates that all mining-permit holders must submit a recommendation letter from the Energy and Mineral Resources Ministry before exporting metal ore.

Such recommendations will only be granted, as stipulated by the draft regulation, if the companies fulfill certain requirements, such as having "clean-and-clear" permits, which would prove that they had complied with procedures stipulated in the 2009 Minerals and Coal Law.

The 2009 Law on Minerals and Coal stipulates that in 2014 all mining companies in Indonesia will be prohibited from exporting raw materials.

To prevent overexploitation of the country's natural resources and excessive environmental hazards before 2014, the government plans to apply the export tax.

Coordinating Economic Minister Hatta Rajasa had previously stressed that the export tax was not intended to increase the country's revenue, but was rather meant to be a disincentive so that mining companies did not sell their commodities in the form of ore.

The companies must also have paid all their tax and non-tax obligations; and they have to submit a comprehensive proposal on whether they intend to build their own smelters, establish a consortium with other companies to jointly build smelters or sell their raw materials to other smelters in the country.

Companies must also sign an integrity pact with the government saying they will stop exporting raw materials by 2014 as mandated by the Minerals and Coal Law.