Government to revise formula of royalty to be paid by miners

Energy and Mineral Resources Ministry is proposing to change the formula of royalty to be paid by coal and mineral producers. Currently, the royalty paid to the government is based on of sales volume.

The government is preparing to change the royalty formula, in which royalty to be paid will be based on a percentage of the market price of coal and mineral.

Director General for Mineral and Coal at the energy ministry, Thamrin Sihita, said his office has submitted the revision of the government regulation (PP) no 45, 2003 on tariff of non-tax government revenues. ?We have submitted the revised PP to the Finance Ministry,? he was quoted by Kontan daily as saying.

According to Thamrin, the calculation of royalty based on percentage of international market price would allow the government to receive higher royalty when the prices of coal and mineral products increase. On the other hand, if the price of the commodity declines, the royalty paid to the government would also decline.

Some observer said that it is reasonable for the government to change the formula because so far the government did not get the benefit of the coal and mineral products price rise in the international market.

Meanwhile, the Indonesian Mining Association (IMA) hopes the government can carry out thorough study before revising the regulation. Furthermore, Syahrir AB, director executive of IMA, hopes the central government can prohibit local governments in imposing levies that are not stated in the Law No 28, 2009 on Tax and Regional government retribution. (*)