Regarding The Zero Percent Coal Royalty, Indonesia Has A Rugi Potential Of IDR 33.8 Trillion

Coal Illustration (Photo: Doc. Antara)

JAKARTA - The issue of the policy of zero percent of coal downstream royalties regulated in the Job Creation Perpu is still reaping polemics in a number of circles.

Economist and Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira estimates that there is a potential loss to the state budget (APBN) from the policy.

"If this incentive is implemented, it can trigger considerable losses for the state. Assuming total coal production of 666.6 million tons per year, the potential loss of royalties is estimated at IDR 33.8 trillion per year," Bhima said at the online Media Briefing Celios event, on Wednesday, February 1.

According to Bhima, if the zero percent policy of coal royalties is valid within the next 20 years, the state is expected to suffer losses of up to IDR 676.4 trillion.

"The potential loss is equivalent to building 305,632 schools and 4,039 hospitals," he said.

Bhima also said that the zero percent policy of coal downstream royalties would have an impact on the target of incentives that were not appropriate.

This is because the greater incentives given to coal companies, including downstreaming or decreasing downstreaming, will increase the state's financial burden.

"So, the budget of IDR 33.8 trillion per year lost from the potential for coal downstream royalties, which is equivalent to 5.7 percent of the total budget deficit. So, the implication is from the deficit, yes, the state will bear a fairly large debt burden in the future," explained Bhima.

Therefore, said Bhima, the implementation of Government Regulation in Lieu of Law Number 2 of 2022 concerning Job Creation or Employment Creation Perppu must be strictly canceled.

"So, the Job Creation Perppu does not have a positive effect on the economy, on state finances, and also on the environment," he concluded.

The zero percent rolyati policy of coal downstreaming is regulated in the Job Creation Perppu Article 128A paragraph (2), which reads, "Giving certain treatment to state revenue obligations as referred to in paragraph (1) for development activities and/or utilization of coal can be in the form of imposition of production/royalty contributions of zero percent".