JAKARTA (TheInsiderStories) – The energy and mineral resources (EMR) ministry set the investment target in mining sector could reached of US$5.98 billion in 2021, said the government official. During 2020, total investment in these sectors was recorded at $3.7 billion or only 47.75 percent of last year’ targets of $7.75 billion.
The director general at the ministry, Ridwan Djamaluddin told the media last week, the 2021′ targets will come from 248 companies. In detail, 21 companies with Contract of Work status, 48 companies with Coal Mining Exploitation Work Agreement, and three Mining Business Permits by the state-owned enterprises.
Then, two firms with Special Mining Permit status, 30 Coal Center Mining Permits, 18 Mineral Center Mining Permits, 17 Pure Processing Mining Business Licenses, 77 Regional Mining Permits, and 35 Mining Service Business Licenses. This year’ strategy are closely monitors the construction of smelters and imposes sanctions on companies that fail to meet the targets, he adds.
In addition, the government will also intensify facilities for resolving licensing constraints, such as the Borrow and Use of Forest Areas. A strategy to spur investment is also carried out through the preparation of mining areas auction.
According to Djamaluddin, the investment realization in 2020 was the lowest number in the last five years. In 2015, the realization of mining investment recorded $5.26 billion. A year later it was up to $7.28 billion. In 2017, the investment fell to $6.13 billion, 2018 reached its highest level of $7.48, and in 2019 fell again to $6.5 billion.
Last year, the coal producer get a good news. The government exempt them to pay the compensation for a number of shortfalls of the Domestic Market Obligation (DMO) in 2020. The relaxation contained in the Ministerial Decree Number 255.K/30/MEM/2020 concerning the fulfillment of domestic coal needs in 2021.
The government also prepared various incentives for mining, oil and gas players to support the downstream projects and to boost the national productions. The country aimed to drive the value added of coal through the coal gasification scheme to become Dimethyl Ether (DME).
Special staff at the EMR ministry, Irwandy Arief, explained that one of the incentive is the provision of royalties of up to zero percent for coal processed. Then, the special coal price formula for the gasification projects and the validity period of the Mining Business License in an accordance with the economic age of the project.
For example, an extension of 10 years from the life of the projects, he adds. The three incentives are currently being discussed by the directorate general of mineral and coal and the ministry of finance, he adds. Others is in the form of a tax holiday or corporate income tax, the exemption of value added tax (VA) for coal processing services to syngas by zero percent.
Furthermore, the exemption from local content engineering procurement construction VAT, the benchmark price for gasification products, the transfer of part of the Liquefied Natural Gas (LPG) subsidy to DME, and the certainty of off-takers or buyers for the downstream products. Through the various incentives, he was optimistic that the investment climate could improve.
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