Indonesia looking at levy on coal exports to boost state coffers

[JAKARTA] Indonesia, the world’s biggest coal exporter, may impose an export levy on the fossil fuel in a bid to boost state revenues, according to local media reports that cited a government minister.

The tariff would only be collected from miners when coal prices are high, with authorities still determining what level that would be, Energy and Mineral Resources Minister Bahlil Lahadalia told reporters after a parliamentary hearing in Jakarta on Monday (Jul 14). He also said a similar levy on gold exports was being considered.

“If prices are good, then they should share some of those earnings with the state,” he was quoted as saying by multiple media outlets. “But if prices aren’t economic, then we shouldn’t burden businesses either.”

Prabowo Subianto’s administration has been rolling out an array of revenue-boosting measures to fund the president’s big-ticket spending plans, which include free meals for all school children and construction of public housing. The royalty rates paid by nickel, tin and other miners were also raised earlier this year to bolster state coffers.

An export levy would add to the royalties already imposed on coal production, which are a major source of non-tax state revenue for Indonesia. The sprawling archipelago produced 834 million tonnes of the fuel last year, roughly half of which was exported, according to government data.

The plan creates policy uncertainty for Indonesian miners, and could add to refinancing risks for high-yield companies with limited liquidity and diversification, Mary Ellen Olson, a Bloomberg Intelligence analyst, said in a note.

Indika Energy, Medco Energi Internasional, Mining Industry Indonesia and Freeport Indonesia are potentially most at risk, she said. BLOOMBERG