Minerals Export Tax May Not Be Bargained

Jakarta, Feb 6 (Antara) - Deputy Minister of energy and mineral resources Susilo Siswoutomo stated that the regulation of minerals export tax, set by the finance minister at 20 to 60 percent, may not be bargained. "The tax may not be bargained," he noted here on Thursday, after attending a meeting on the evaluation and coordination of minerals and coal in connection with the added value and efforts to put the mining sector in order, keeping in mind, the welfare of the people. The Indonesian Chamber of Commerce and Industry (Kadin) has considered the tax too burdensome for businessmen, adding that the tax is far above their profit margin. In view of that it has called on the government to reduce it by five to seven percent, saying that if the government is persistent, then many mining operations may collapse and, in turn, affect employment, state revenue, trade balance as well as rupiah exchange rates. Susilo however added that the government will not cancel or withdraw the regulation because it has already been at work for the past five years. "They should have started building smelters five years ago, if they did not want the operations to collapse," he added. "The export tax is aimed at compelling them to build smelters and not seek profits. They should have started building smelters five years ago," he reiterated. The director general of minerals and coal, R Sukhyar, meanwhile stated that the tax figure will not be revised again and the government will firmly commit to what it has decided. Referring to PT Newmont`s request for freeing their exports from the tax he retorted, "The regulation cannot be bargained." Industry minister MS Hidayat meanwhile stated, on a separate occasion that he believed PT Freeport Indonesia will not seek arbitration with regard to its complaint over the tax. "Freeport will not seek arbitration so long as there is still a way out," he pointed out. He added that the possibility to settle differences between the government and the US company through legal avenues was still very small. Freeport Vice Chairman McMoran Richard C Adkerson met several officials recently with regard to the implementation of the tax regulation. Based on the law on minerals and coal, all mineral and coal industries in the country must process their mining ores in the country before exporting them, starting January 2014. If they continue to export, then they will have to pay export tax progressively ranging from 20 to 60 percent.