Indonesia Will Restrict Bauxite Export in June; No Relaxation

TEMPO.CO, Jakarta - Indonesia's Minister of Investment and Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia stated that the restriction on bauxite ore exports would not be postponed. The export ban will be put into effect as planned, starting June 2023.

Without denying that bauxite smelters in Indonesia still lack in numbers, Bahlil asserted that there would be no relaxations for bauxite ore importers.

When met at his office in South Jakarta on Thursday, February 16, Bahlil said that although the government often experimented with a policy, right now Indonesia will remain consistent in implementing plans for industrial downstream.

Meanwhile, the Indonesian Bauxite and Iron Ore Association (APB3I) said that most of the work plans and budgets (RKAB) of bauxite mining companies have yet to be approved by the Ministry of Energy and Mineral Resources, with regard to the export ban policy which is scheduled for June 2023.

Nevertheless, Bahlil insisted that this was not a problem, and thus the government will begin to stop exporting bauxite ores by mid-year.

To encourage the construction of smelters, Bahlil said the government has prepared a number of incentives for investors including tax holidays, imports of capital goods, and tax allowances.

However, Bahlil stressed that incentives would not be given to investors with a break-even point in five years, or those with a high internal rate of return (IRR).

President Joko Widodo earlier this month said that it was difficult to seek funding to build a nickel and bauxite smelter. On February 6, he asked financial services industry players in Indonesia to provide concrete support for the construction of smelters whilst emphasizing careful calculations.

Riani Sanusi Putri

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