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Indonesian Coal Contracts to Revenue Tax to Remain in Limbo

Coal News - Published on Wed, 09 Oct 2019

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Jakarta Post reported that only an inept government would allow the legal status of an industry that is vital to national power generation and contributes significantly to tax revenue to remain in limbo. But imbroglio is truly the biggest problem that seven major coal mining companies are now facing after deliberations on the amendment of the 2009 Mining Law were postponed. President Joko “Jokowi” Widodo openly expressed outrage upon learning from a World Bank report early September that Indonesia was one of the least attractive countries in ASEAN for foreign direct investment. But legal uncertainty, as currently encountered by coal mining companies, is one of the main barriers to investment. Discouragingly, too, the President only has himself to blame for allowing such imbroglio.

The long delay in the enactment of new regulatory guidelines for the extension of coal mining contracts of work of the first generation in Kalimantan had resulted in one major coal producer stopping production when its contract ended.

Worse still, the previous House of Representatives failed to complete the Mining Law amendment by the end of its term on Monday. Hence, there is currently no regulatory guidance whatsoever for contract extensions. Six other major coal companies with contracts that will expire within the next three years have virtually stopped new investment over uncertainty in their contract extensions.

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Posted By : Rabi Wangkhem on Wed, 09 Oct 2019
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