Minister of Finance asked to help prevent investors? withdrawal

The Ministry of Energy and Mineral Resources has formally asked the Ministry of Finance to help prevent massive withdrawals of investors from the country?s mining sector by revoking unpopular regulations that have impeded their activities, Bisnis Indonesia reported on Wednesday.

Director General of Geology and Mineral Resources Wimpy S. Tjetjep said in Jakarta on Tuesday that he had sent a letter to Minister of Finance to explain investors? problem. "The explanation is focused on regulations which have impeded investors? operations," he added.

At least 33 coal mining companies, with combined investment plans worth about US$1 billion, have been reported to have pulled out or suspended their investment plans due to overlapping regulations

According to the secretary general of the association of Indonesian coal mining companies (APBI), Jeffrey Mulyono, the government regulation No: 144/2000 which changes the status of coal products from taxable goods to non-taxable goods is one of the reasons why the mining companies have cancelled or pulled out their investment plans.

"Being considered as the producer of non-taxable goods, their imported goods are no longer exempt from Value Added Tax. This has caused an increase in their investment costs by between 6 percent to 10 percent," he added.

According to Jeffrey, the change in the tax status of coal products has practically removed all the tax incentives given to coal mine operators. He added that the association had gained support from several related institutions to remove the regulation No:144/2000.

Wimpy acknowledged that the tax problem was one of many reasons why investors had withdrawn. Many investors also stopped their activities because the projects were not economically viable or because the coal deposit had low quality. (*)