Govt Plan to Impose Export Duty on Iron Sand Reaps Protests

TEMPO.CO, Jakarta - Mineral businessmen are protesting the government's plan to impose export duties on iron sand, citing it will have insignificant contribution to state revenues.

"We are not even exporting yet, how come there's already a plan to impose a duty?" Ladjiman Damanik, executive director of Indonesian Mineral Businesses Association, said yesterday, February 4, 2016.

Ladjiman said mineral businesses have not exported their products because there is no demand. Overseas businesses that process iron sand, such as China and Japan, prefer products from New Zealand that has higher contents of titanium and ilmenite.

Instead of planning for a duty fee, Ladjiman suggested the Ministry of Energy and Mineral Resources to make policies that can stimulate the development of Indonesia's iron sand processing technology.

The Indonesian government allows the export of iron sand since through the revision of the Minister of Energy and Mineral Resources' Regulation No.1/2014 on Added Value through Domestic Processing and Smelting Activities.

The export duty is set in a bid to boost non-tax revenues from the mineral and coal sector to Rp48 trillion this year, up from last year's Rp30 trillion.

The exit duty, set based on the Finance Minister's regulation No.153/PMK.011/2014, is set at 7.5 percent for exporters whose smelting construction progress is 0 to 7.5 percent. The duty will be lowered to 5.0 percent once the smelter progress reaches 7.5 to 30 percent, and exempted if the progress reaches more than 30%.

The policy has been implemented for the exports of copper, zinc, iron, manganese, and titanium.  

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