Coal export tax to ensure domestic supply

Indonesia imposed a 5 percent tax on coal exports to ensure the fuel is available to domestic businesses and to increase its use in the country, Minister of Trade Mari Elka Pangestu said as quoted by agency.

Former minister of finance Jusuf Anwar issued a decree on Oct. 11 to impose a 5 percent tax on coal exports, pending decision on the benchmark price to calculate the price by the trade ministry.The trade minister set the base price at US$30 a metric ton on Jan. 5.

Indonesia, which sells about 70 percent of its coal output overseas, previously didn't tax exports of the fuel. The tax may hurt sales and earnings at coal miners, said Jeffrey Mulyono, Chairman of the Indonesian Coal Mining Association."The tax will reduce our competitiveness against producers such as Australia, South Africa and newcomers such as Vietnam," Mulyono said on Jan. 15. "It will add further to our costs after a sharp rise in fuel prices."

Indonesia's five biggest coal exporters including PT Bumi Resources and Adaro Indonesia won't have to pay the tax as their contracts with the government shield them from levies imposed after signing of the accords, Mulyono said.

The tax will be valid to contracts signed starting Dec. 23, Pangestu told reporters on Tuesday in Jakarta. The base price will be review on the 23rd of every month, he said.

Indonesia was the largest coal producer in Asia Pacific after China, Australia and India in 2003, according to BP Plc's Statistical Review of World Energy. (*)