Industry Players Propose Minerba Royalty Increase Postponed, What's Up?

Mine (between)

JAKARTA - mineral and coal industry players propose that the government postpone the increase in mineral and coal royalties. The Indonesia Mining Association (IMA) requested that the regulation on the increase in royalties be reviewed because it will have a direct impact on the investment climate as well as the competitiveness of mineral and coal in the midst of the spirit of downstreaming.

"For mineral mining companies, the increase in royalty rates will be burdensome because of the high operating costs due to the increase in biosolar costs which can have a significant impact. In addition, there is also an increase in VAT of 12 percent, the imposition of retention data on export results is 100 percent for 12 months, which increases debt and interest," said IMA Chairman Rachmat Makkasau in a statement to the media quoted Monday, March 17.

In addition, he continued, mineral and coal industry players are also currently investing heavily in the construction of smelters as part of downstreaming. The investment attracted large funds and resulted in the opening of thousands of jobs.

"Because the smelter is in its early stages and will only produce within two or three years, the business actor hopes that it will not be burdened with an increase in royalties which will increase cash flow," he continued.

In line with IMA, the Indonesian Nickel Industry Forum (FINI) also proposed the postponement of the increase in nickel royalties. This is inseparable from the severe reality faced by the nickel industry, whose selling price in the international market is now falling to its lowest point since 2020.

As a government partner, FINI is committed to the success of downstream nickel and its derivatives. FINI presents a number of tough challenges such as falling prices plus tough challenges due to the Chinese-American trade war. Therefore, FINI views the postponement of the increase in royalties as a valuable incentive to support the existence of the domestic nickel industry in the midst of global challenges.

"To maintain the investment climate and competitiveness of Indonesian nickel downstream products in the midst of uncertain world situations, we propose that royalties not be increased at this time," said FINI General Chair Alexander Barus.

FINI views that government support by delaying the implementation of the increase in royalties will lead to a positive multiplier effect. In addition to maintaining the investment climate and competitiveness of downstream products, the healthy nickel industry will also contribute in the form of maximum Non-Tax State Revenue (PNBP).

"In order to maintain and increase PNBP for the mineral and coal sub-sector by considering the current challenge, the solution is to impose the current royalty rate including coal royalties for IUPK and PKP2B," said Alexander.

As a government partner, FINI is ready to discuss with all stakeholders to support the nickel industry. FINI is also optimistic that the synergy between business actors and the government will further encourage the competitiveness of Indonesia's nickel downstream.

Previously, the government was completing the drafting of government regulations (PP) which will regulate the increase in mineral and coal royalties (minerba) rates. This rule is considered by business actors to be out at difficult times due to global challenges and the falling commodity prices.