Govt unlikely to impose export tax: Adaro?s Tohir

By Reiner Simanjuntak

The government is unlikely to go ahead with plan to impose export tax on coal, according to Garibaldi Tohir, President Director of PT Adaro Energy, one of the country?s largest coal producers.

?This is my personal view ? I think the government will think twice before imposing export tax,? he told participants of the18th Coaltrans Asia conference in Bali on Monday.

Tohir, who claimed that he had discussed the issue with several government leaders, explained there are a number of reasons on why he has arrived to such conclusion. He said that coal is an important economic sector in the country, which means that it?s not in the interest of the government to cause harm to the industry.

Secondly, coal sector is different from the mineral sector as coal is a finished product, while minerals are considered as raw material that can be further processed at home to generate greater added value.

?To create more value (from coal), I would suggest coal producers to enter the electricity production sector to help power economic growth,? he said, adding that Adaro is currently in the process of completing the construction of a coal-fired power plant as part of the company?s vertical integration strategy.

Thirdly, considering that the local stock market has been under pressure lately, and coal prices have been on a declining trend, the government is likely to avoid from making policy that would only cause further harm to market confidence.

There have been talks earlier that the government is considering to impose export tax on coal to push local producers to process the commodity at home rather than exporting them as raw material, in a bid to generate greater added value from the commodity for the country.

The government has imposed a 20 percent export tax on 65 mineral products.

Editing by David Mustakim