Government to increase royalty of major coal miners

The government plans to increase the royalty tariff of major coal miners in the country in a bid to increase state revenue, Bisnis Indonesia reported on Wednesday.

The paper said that the coal royalty rate of the coal miners holding the coal contract of work (or PKP2B) will be increased from the current 13.5 percent to 15 percent.

The royalty hike plan is contained in the draft of a new government regulation on the tariff of tax and non-tax financial obligation of coal miners.

According to the draft of the new regulation, however, the corporate income tax will be cut down from 45 percent to 25 percent on a prevailing basis. In addition, there will also be a 10 percent value added tax, also on a prevailing basis.

Executive Director of the Indonesian Coal Mining Association (ICMA) Hendra Sinadia said that the royalty hike would be quite burdensome for the coal miners particularly amid the current rising challenges in the global market.

He feared that the royalty hike would discourage coal miners from making new investment in exploration activities which in turn would undermine future coal reserves and production in the country.

Minister of Energy and Mineral Resources Ignasius Jonan declined to provide much comments as it is under the authority of the Ministry of Finance, but acknowledged he is aware of the planned royalty hike.

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