TEMPO.CO, Jakarta - Mineral businesses are asking the government to cancel its plan to revise the regulation on the types and tariff for mining goods' non-tax revenues.
Ladjiman Damanik, chairman of the Indonesian Association of Mineral Entrepreneurs (Apemindo) said that revising Government Regulation No.9/2012, which stipulates non-tax revenues from mineral goods, is not an effective way to boost royalty income.
"It is nothing but a 'toothless tiger'", Ladjiman told Tempo last week.
Through the revision, the government will increase the amount of royalty for raw minerals that are smelted by factories with an industrial business permit (IUI) published by the Industry Ministry. For minerals smelted by companies with a mining permit (IUP), the royalty will only be imposed on the final/processed products.
Ladjiman said that increasing mineral royalties by IUI smelters will have little impact, since most smelting companies have both IUI and IUP, which mandates them to pay two types of royalties: for raw minerals and processed minerals.
Companies that have both permits will most likely reject the idea of having to pay a new, more expensive kind of royalty.
In the end, the amount of royalty obtained by the state will not increase, and there will be arrears due to maladministration, Ladjiman said.
To address the problem, Ladjiman urges the Energy Ministry to coordinate with the Industry Ministry. He also asks the government to decide which ministry has the authority to issue smelting permits—and charge royalties.
"We must avoid having a revision that is counterproductive to the plan of building our own smelters and processing all of our mining goods onshore," Ladjiman stated.
Meanwhile, the Energy Ministry's director general for Mineral and Coal Gatot Ariyono said they will continue with the revision plan and impose a royalty hike this year.
Commenting on the issue Budi Santoso, executive director at the Center of Indonesia Resources Strategic Studies (CIRUSS), suggests the government to stop imposing royalties on raw minerals processed by local smelting companies.
The goal is to motivate businessmen to build smelters, Budi said. He also urges the government to be strict in determining who has the authority over smelting licenses, to "prevent dualism in the licensing of Indonesia's mineral processing industry."
Indonesia is still making low revenues from the mineral sector. According to the Energy Ministry, the 2015 non-tax revenue from the mining sector was Rp 29.6 trillion or just 56 percent of the targeted Rp 52.2 trillion. Royalty income accounted for Rp 14.9 trillion.
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