Smelter licensing authority handed over to BKPM

The Office of the Coordinating Minister for Economy finally decided to hand over the licensing authority for the development of domestic mineral smelters to the Investment Coordinating Board (BKPM).

The decision was made at a meeting of economics ministers on Thursday. Meanwhile, the Ministry of Industry is given authority to supervise the development of the domestic smelters.

The decision is expected to end dispute between the Ministry of Energy and Mineral Resources (MEMR) and the Ministry of Industry. The MEMR had demanded that it should hold authority over the licensing of domestic smelters projects as the smelter owners hold IUP mining business permits for their mineral mines. Meanwhile, the Ministry of Industry demanded it hold the licensing authority because the smelter projects require the industry business permit, or IUI.

Minister of Industry Saleh Husin said that although the licensing authority has been transferred to BKPM?s one stop integrated services, the 2017 target for the completion of domestic smelter projects remains in place. The MEMR previously suggested for the deadline to be pushed back as miners have difficulties to meet the 2017 target amid the lingering commodity price drop.

Meanwhile, Minister of Finance Bambang Brodjonegoro said that smelter projects are entitled to tax incentives such tax allowance once they have been completed. If the investors further move downstream such as developing stainless steel industry, they can get additional incentives including tax holiday. (*)