Fiscal and Non-Fiscal Incentives for Coal Downstreaming

Summary

The government provides incentives, both fiscal and non-fiscal, to coal mining companies to accelerate the downstream process, including through the Job Creation Law or Omnibus Law on Job Creation. Director of Coal Business Development at the Ministry of Energy and Mineral Resources (ESDM) Sujatmiko said the aim of providing fiscal and non-fiscal incentives is to make downstream projects more economical. Non-fiscal incentives include, among others, business permits for as long as the mine reserves exist. This means that mining business permits are no longer limited to 20 years.

Meanwhile, fiscal incentives in the form of royalty exemptions for coal, which used as raw material for downstreaming. Even so, Sujatmiko emphasized, the zero percent royalty will not reduce state revenue, because downstreaming is able to create multiple effects, namely opening job fields and driving the wheel of the regional economy. With these multiplier effects, the loss of state revenue from zero percent royalty will be substituted. "For the road industry, the aggregate tax will provide benefits for the state. For the regions it will also have an impact on the development of supporting infrastructure and economy," Sujatmiko said in a written statement.

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