Increasing coal royalty is not the way foward

A LinkedIn item (7 Jan 2015) suggests the government of Indonesia is considering “raising royalties for coal companies by about 4% by revising Government Regulation No.9 – 2012 on tariffs and types of non-tax revenue in a move to generate more State income.”

Indeed an expert witness for the Government, A. Tony Prasetiantono, Ph.D. and others indicated there would be losses of income tax in the first 2 to 3 years, and that there will be greater profits in the long run, with one reference to 2017 being the year of greater revenues. Clearly if the last government undertook this decision to place significant restrictions on the mineral ore export industry, then it implies the next government must live with it, or change the decision - to more readily allow some ore exports. Buy simply placing further business restrictions on the coal industry may force more mine closures, and result in even less government revenues.