Indonesia mulls over rising coal royalty

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The Indonesian government considered increasing royalty and export tax of coal to 10-13 percent next year from 5-7.5 percent, as an effort to tap more revenue, official said here on Wednesday.

Thabrani Alwi, expert of the energy and mineral resources ministry said that rise would be applied on the mining permit holders (IUP), but for the holders of work agreement for coal mining enterprises (PKP2B), the royalty remained at 10-13 percent.

"The government plans to raise the royalty for the holder of mining permit to 10-13 percent," he said.

The government has attempted to get more revenue from mining sector which has contributed 12 percent to the state revenue.

The plan to impose the royalty and export tax hike was going to boost illegal mining operation in the country, according to Pandu Syahrir, chairman of commercial committee of Indonesian Coal Mining Association (APPBI).

"The government plan to apply royalty and export tax hike may intensified illegal mining," he said.

The chairman said that the government needs to address the problem of the illegal mining activity, which has produced over 56 million tons of coal per year, according to Syahrir.

Most of the illegal mining operation took place in the center of coal production, such as Kalimantan island, he said.

The chairman said that the illegal mining has led to a financial loss of up to 5.5 trillion rupiah (some 466.10 million U. S. dollar) a year.

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