PP 104/2000 will slow down transfer of funds to local administrations: IMA

The Indonesian Mining Association (IMA) has expressed concerns that the issuance of Government Regulations (PP) No. 104/2000 on fiscal balance between central and local administrations will slow down the transfer of funds from central government to local administrations.

IMA executive director Paul L Coutrier said as a result of the issuance of PP No. 104/2000, the chain of bureaucracy on the payment of royalties by mining companies to the government became longer than before.

According to PP 104/2000, mining companies are required to report the amount of mineral they have produced and royalties they have to pay to the Ministry of Energy and Mineral Resources. The Ministry will then pass the report to the Ministry of Finance that confirms the amount of royalties that have to be paid by mining companies.

After confirmation from the Ministry of Finance, the mining companies then pay their royalties to the central government, which later transfers to local administrations the portion that have become the rights of local administrations.

"We see the mechanism on the royalty payment has become longer. Before, companies just needed to report to the Directorate General of General Mining, and then directly went to the Ministry of Finance. The process was so simple because everything was processed by the central government," Coutrier said.

With this longer process, Coutrier said, IMA was concerned that local administrations would get their portion a bit late. "This situation makes us a bit worried because local administrations could be suspicious that the delay is made deliberate by mining companies."

Therefore, he said IMA would help find alternative ways so that local administrations would get their portions quickly. "One of the ways is studying the possibility to pay cash advance to local administrations." (*)