Indonesian Coal Mining Association (ICMA) Chairperson Pandu Sjahrir has stated that the country’s coal miners have urged their government to immediately revoke the Minister of Trade Regulation (Permendag) No. 82/2017, which requires the use of ships and national insurance for the export of certain commodities such as coal and palm oil (CPO).
Nevertheless, Pandu explained to provide certainty and clarity for exporters and also for importers, his party requested that the Ministry of Trade immediately issue a Minister of Trade Regulation to revoke and cancel the previous rule.
“We propose an immediate revocation of the Minister of Trade Regulation 82 in 2017 to maintain the smooth export in the midst of the spread of the corona virus [Covid-19]”, Hendra said.
According to him, Minister of Trade Regulation no. 82/2017 which is planned to be effective on May 1, 2020 has proven to have caused unrest and concern about the smooth export of coal until importers have canceled several coal import purchases. In addition, the regulation will also create additional financial burden on coal exporters. ICMA believes that the enactment of the Regulation of the Minister of Trade 82/2017 is not in line with the government’s efforts to deal with the impact of the spread of Covid-19.
“We have expressed concern that exports will be hampered as well as potential additional costs to the government both in official meetings and through official letters that we have sent several times in recent months”, said Pandu.
He added, the policy requiring coal exports to use ships owned by national shipping companies, would add to the cost burden so as to make the selling price of free-on-board (FOB) coal uncompetitive and increasingly depressed. The reason is that, in the FOB scheme, it is the importer who is obliged to take care of the procurement of ships and insurance. However, he will continue to support the development of the national shipping industry in order to be able to further develop the capacity of national ships to serve coal transportation.
Meanwhile, Chairman of the Indonesian Mining Experts Association (Perhapi) Rizal Kasli said that coal commodities accounted for 80 percent of Non-Tax State Revenue (PNBP) in the Indonesian mineral and coal subsector. Delaying the provisions on the use of domestic vessels will ensure that PNBP deposits to the country can be optimized.
“The coal mining industry, in addition to contributing to PNBP, also has a role in creating jobs, developing regions, and supplying energy sources for power generation,” he said. Rizal said coal miners were worried that the use of national vessels would increase transportation costs because the number of the fleet was not yet in line with needs.
“If we cannot be competitive buyers, it will shift their orders to other coal-producing countries. Moreover, at this time the competition is also with falling petroleum prices, even now it is below the level of USD 30.00 per barrel. The current price of oil : Brent Oil is priced at USD 28.89 per barrel and WTI at USD 27.35 per barrel,” he explained. According to him, the policy on the obligation to use ships and national insurance can be carried out if the national transportation company is also ready for it, especially its fleet which is sufficient and competitive prices.
“This aims to ensure that the flow of goods, especially for exports, also runs smoothly as usual,” Rizal said.
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