Export tax will not affect Indonesia's coal production: APBI

The government's plan to impose a five percent export tax on coal export will unlikely affect the target to raise coal production in the country to about 175 million tons next year, according to the association of coal producers (APBI).

The association's chairman Jeffrey Mulyono said in Jakarta on Monday that the increase in the coal production would continue next year as most of the country's coal producers would try to raise their production to take the advantage of the rise in coal prices in the international market.

"The coal price is expected to increase to between US$45 and US$50 per dollar next year. This will encourage producers to raise their production," he was quoted as saying by Investor Daily.

The rise in the coal prices will be triggered by the increase in the demand from main coal users such as India and China. "The demand from India and China would reach 40 million tons and 100 million tons a year, respectively, within the next 100 years, while the supply would mostly come from Indonesia and Australia," he said.

He, however, said that although the export tax would not affect production, its implementation would constitute another forms of disincentives to the country's coal mining activities.

Finance Minister Sri Mulyani said she would soon introduce the five percent export tax to protect local coal demand. But she said that the export tax will not be linked with coal prices as earlier planned by former Coordinating Minister of Economy Aburizal Bakrie.

Aburizal earlier said that the export tax would be imposed only if the coal prices reached an average of US$50per ton. (*)