Jokowi's Minister Of Economy Kompak Bantah Faisal Basri Regarding Nickel Downstreaming, This Is What He Said

Illustration of nickel (Photo: Doc. Antara)

JAKARTA - Senior Economist of the Institute for Development of Economic Finance (Indef) Faisal Basri, who said that downstream nickel only benefits China's industrialization, was denied by Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan and Minister of Finance (Menkeu) Sri Mulyani. The two ministers denied Faisal's accusations through their respective trusted people.

The Special Staff of the Minister of Finance for Strategic Communication Yustinus Prastowo firmly denied Faisal's accusation that China's nickel smelter was not subject to tax collection. Because, through Government Regulation (PP) Number 26 of 2022, the government has regulated PNBP tariffs for natural resources and royalties on nickel and its purification products.

"Bang Faisal Basri who is good, I first answered one thing about PNBP and royalties. You are wrong when you say there are no levies because of the fact that through PP 26/2022, the PNBP SDA tariff and royalties on nickel and purification products are regulated," he said, quoted on Tuesday, August 15.

According to Yustinus, mineral management is directed to support downstreaming as mandated by Law Number 3 of 2020 concerning Minerba. Through this policy, the government has done two things. First, prohibiting nickel ore exports since 2020.

Then, impose a different royalty rate for Mining Business License holders (IUP), between those who only produce or sell nickel ore with companies that also have smelters. Rate royalties for 10 percent nickel ore and tariffs for Nickel or Nickel Matte at 2 percent.

Riyalti memang pungutan yang secara konsep dan aturan dikenakan thd penggeksi sumber daya alam. Ini berlaku umum. Menyaksa izin Usaha Industri pungutannya tentu bukan royalti, melainkan waji keluar ( saat impor) dan pajak-pajak lain (PPh, PPN, Pajak Daerah det), katanya.

Meanwhile, Deputy for Investment and Mining Coordination of the Coordinating Ministry for Maritime Affairs, Septian Hario Seto, also denied Faisal Basri's accusation that China's smelter was not taxed. Seto emphasized that the statement showed that Faisal did not understand the tax holiday rules so that it reached the wrong conclusion.

"Here Faisal Basri does not understand the provisions of the tax holiday in Indonesia so that he reached the wrong conclusion. The 20-year tax holiday is given with an investment of Rp. 30 trillion or more. If it is less than that, it will adjust the period, between 5-15 years. This tax holiday incentive is only for corporate income tax, other taxes still have to be paid," he said.

Seto added that the year tax revenue from the nickel downstream sector in 2022 was IDR 17.96 trillion, an increase of 10.8 times compared to 2016 which was only IDR 1.66 trillion.

Meanwhile, corporate income in this sector in 2022 is IDR 7.36 trillion, an increase of 21.6 times compared to 2016 which is only IDR 340 billion.

The analysis conveyed by Faisal Basri in denying President Jokowi's statement regarding taxation is also wrong. From the data above, there has been a significant increase in taxes from the downstream sector," said Seto.

"It should also be noted that tax revenues from the downstream nickel sector have not included tax revenues from other sectors that have also grown due to downstream nickel, such as ports, steel rolling, construction services, food and beverage and accommodation industries," he continued.

Seto also denied that Faisal's accusation that 90 percent of the downstream nickel profits were only enjoyed by China. Faisal argued that Indonesia only processed nickel ore into nickel pig iron (NPI) or ferronickel, which 99 percent of the proceeds would be exported to China.

According to Seto, Faisal should have calculated how much resources each smelter spends in producing feronikel. The resources for nickel production include labor, technology, electricity, and other raw materials.

Based on Seto's analysis, of the 100 percent value of smelter products, the contribution of nickel ore is 40 percent, 12 percent of operating profit that investors can enjoy and 48 percent are additional resources that need to be spent to process the nickel ore.

"Of the 48 percent of these figures, 32 percent are enjoyed by domestic economic actors in the form of coal (for electricity), labor, and other raw materials so that only 16 percent is enjoyed by suppliers from LN (outerland)," he said.

Based on this calculation, Seto believes that the added value enjoyed by investors and suppliers is only 16 percent plus a 12 percent operating profit component, bringing it to 28 percent.

Meanwhile, the added value enjoyed by domestically is 32 percent or proportionally reflecting about 53 percent of the total value of nickel downstream.

"The value of domestic added value will be greater if the foreign investors invest in the country, no longer get a tax holiday, or even involvement of local investors, such as Harum Energy, Trimegah Bangun Persada and Merdeka Battery Materials," concluded Seto.