Planned export tax may cause RI to lose competitiveness

By Adianto P. Simamora

The government's plan to introduce export tax on coal could cause Indonesia to lose competitiveness compared to other major supply regions, putting a risk on up to 68 million tons per annum of Indonesian coal exports and US$11billion of company value, Wood Mackenzie warns.

?Indonesian cash costs have doubled since 2006. This was not an issue while coal prices were rising but now that prices have softened it is important to constrain costs to keep projects viable. Even without the imposition of an export tax, Indonesian coal producers may find it difficult to prevent a continuation of cost increase imposition but additional taxes will further exacerbate cost hikes.? Wood Mackenzie?s senior coal research analyst, Mr. Rohan Kendall said in CoalTrans Asia in Bali.

He said that Indonesian tax is already one of the highest tax and royalty rates for coal exporting countries with approximately 20 percent of coal producer?s revenue flowing to the government.

?If an export tax is applied to coal producers, the cash costs of affected mines will increase by an average of US$19/ton. This translates to an estimated 36 percent increase in cash costs,? he said.

Noting that the tax will erode the competitiveness of Indonesian mines Kendall says, ?An Indonesian export tax would have a larger effect than the combined impact of Australia?s minerals resource rent tax (MRRT) and carbon tax, which we estimate will decrease the value of the Australian coal industry by US$9 billion.?

Editing by David Mustakim