Kadin opposes punitive mineral export tax, plan judicial review

By Hiski Darmayana

The Indonesian Chamber of Commerce and Industry (Kadin), a powerful business lobby, has opposed the 20-60 percent progressive export tax imposed on mineral concentrates for the next three years.

Didie W. Soewondho of Kadin said Wednesday that the punitive export tax would create losses for the miners as the rates exceed the profit margin of the mining industry. Other negative impacts include massive layoffs as miners collapse, and bank loans turning sour, he added.

He said that Kadin has already proposed the ideal export tax rate to the government, which varies depending on the commodities. He cited as an example that the ideal export tax rate for iron ore is 5 percent, which is in line with the industry profit margin. ?But what we actually want is a zero percent export tax.?

The Ministry of Finance issued a new regulation earlier this year subjecting six mineral concentrates with progressive export tax, starting with 20 percent this year and gradually increasing to 60 percent in 2016.

The new policy came after the government implemented the long-planned export ban on mineral ores on January 12, but still provided the six mineral concentrates including copper, iron ore, manganese, zinc, lead and ilmenite with a grace period, allowing it to be sold overseas until 2017.

Meanwhile, another Kadin senior official Natsir Mansyur, was quoted by Kotan daily as saying that the lobby group plans to file a judicial review of the Ministry of Finance?s regulation on the export tax with the Supreme Court if the government fails to address the concern of the miners.

Editing by Reiner Simanjuntak