Jakarta. Indonesia will maintain its policy on taxing exports of mineral ores, Deputy Finance Minister Bambang S. Brodjonegoro says, reminding the mining industry of its commitment to build smelters.
“We have the policy, and it must be continued. There is no change in the export tax,” Bambang said at his office on Friday night.
He also assured that policies on the mineral export ban set by the Energy and Mineral Resources Ministry and the Industry Ministry will be maintained .
“We will coordinate with them [the two ministries] in a short time. On the tax export we are assured by the Finance Ministry that the policy will not change,” Bambang said. He denied that there will be a review or changes in the export tax regulation.
The Trade Ministry and Energy Ministry each has its own policy on the mineral export ban, such as the guarantee of mining companies’ willingness to build smelters, Bambang said.
However, since that smelter building initiative might be confusing for exporters, the export tax should be the only policy that should be enforced, he added.
“We don’t want a complicated regulation that’s confusing. We want to focus on the export tax, even though the goal is building smelters,” Bambang said.
The export tax, though, is having a big impact on the country’s trade balance. The Central Statistics Agency (BPS) reported last Monday that Indonesia’s trade balance had a $431 million deficit in January, which ended three months of surpluses. The mineral ore export ban was implemented on Jan. 12, and those exports dropped 70 percent in January from the month before.
Bambang said the trade condition would improve this month as exporters start to export again.
“This month will get better. We hope exporters can begin to ship mineral ores. In January the trade balance deficit was also caused by lower exports of crude palm oil and coal. If they all come back to business we will be in surplus again,” Bambang said.
The Indonesian Chamber of Commerce and Industry (Kadin) opposes the mineral ore export tax, saying that there is the potential for miners’ bad loans to increase. Kadin’s deputy chairman for trade distribution and logistics, Natsir Mansyur — who is also president director of smelting firm Indosmelt — had said that miners’ bad loans have the potential to rise to more than Rp 45 trillion ($3.9 billion) should the export tax increase to 60 percent from 20 percent.
He didn’t give the latest amount of bad loans.
“Bad loans will be Rp 45 trillion. This is a disaster, the cause is systemic,” Natsir said last month.
The export tax on mineral ores is based on Finance Ministry Decree Number 6/2014, which calls for the export tax to rise from 20 percent to 60 percent by the end of 2017.
Bambang’s reply to Kadin’s complaints is that regulation hasn’t changed despite protests from miners.
As for exports, Bambang will be monitoring the progress. If the miner doesn’t have the willingness to build a smelter, then its export permit should be terminated.
Bambang explained that in order to have an export permit, exporters should receive a recommendation from the Energy Ministry, and they then apply to the Trade Ministry to be a registered exporter.
“From there, we also should see their progress on [building a] smelter,” Bambang said.