Kadin urges govt to increase the role of local mining contractors

Indonesian Chamber of Commerce and Industry (Kadin) has urged the government to provide a bigger role for national contractors in the mining sector, the Bisnis Indonesia newspaper reported in its Saturday edition.

Kadin’s energy development committee chairman Herman Afif Kusumo said national companies must be involved more in the mining sector, which is presently dominated by foreign companies.

“Participation of national companies (in the mining sector) is very important. Moreover, national companies like PT Arutmin Indonesia and KPC (PT Kaltim Prima Coal) are currently managing mines," Herman said during a press conference in Jakarta.

According to Herman, the strengthening of national companies in the mining sector will be able to boost the sector’s contribution to the economy.

The present main problem of mining sector is taxation. The government should have taken action in this regard to make the mining sector attractive to the investors.

Indonesian mining companies have formally asked the government this week to lower tax payment, which is now equivalent to 65 percent of their income to between 35 percent and 40 percent.

The request was made by deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin), A.M. Kusumo during a meeting with Minister of Energy and Mineral Resources in Jakarta on Wednesday.

Speaking following the meeting, Kusumo said that the high tax payment might discourage investment in the country’s mining sector. “We propose the government to reduce tax payment to between 35 and 40 percent,” he said.

At present, mining companies have to pay 11 types of taxes. The royalty tax imposed on gold mining companies, for example, reached 3.5 percent.

In addition, the mining companies are also required to pay tax for the operation of heavy trucks or other heavy equipment even though such equipment are only operated within the mining companies’ mining areas.

Director General of Geology and Mineral Resources Simon Sembiring said that the government understood the local mining companies’ complaint. “It is normal if they demand lower tax payment,” he said.

But Simon said that the main impediment that discourages investment in the mining sector is not the amount of the tax payment but the uncertainty in tax regulations.

He said that in addition to taxes imposed by the central government, the mining companies are also required to pay different kinds of levies imposed by local governments. (*)