Indonesia Plans Export Duties, Windfall Tax On Coal And Nickel To Ease Subsidy Burden

JAKARTA, May 4 (Bernama) -- Indonesia plans to introduce export duties and a windfall tax on coal and nickel as part of efforts to offset rising subsidy costs in the national budget.

Finance Minister Purbaya Yudhi Sadewa said the proposed measures are still under discussion with the Energy and Mineral Resources Ministry.

“Discussions are ongoing with the energy ministry, but what is clear is that the revenue will be enough to help close the subsidy gap,” he said, according to Antara News Agency on Monday.

Purbaya said coal and nickel exports have not been subject to export duties, creating loopholes that could enable under-invoicing and smuggling, while limiting customs authorities’ ability to inspect shipments prior to departure.

The introduction of export duties is expected to grant greater authority to the Directorate General of Customs and Excise (DJBC) to inspect goods before export, helping to curb revenue leakages.

Despite the planned tax measures, he said the government remains committed to promoting downstream industrial development, particularly in the nickel-based battery sector.

Incentives are being considered for industries that utilise domestically sourced raw materials, in line with Indonesia’s broader push to strengthen value-added processing.

Separately, Purbaya said the government may offer tax incentives, including exemptions, for global investors placing assets in a planned financial special economic zone, or International Financial Center (IFC), in Bali.

“If requested, I can give zero per cent. With that, zero tax is fine as long as the funds enter the financial special economic zone. That should also be linked to strengthening our foreign exchange reserves,” he said.

He said inflows of global assets could support Indonesia’s bond market by increasing foreign participation in government securities.

“They can buy government bonds. If they ask for lower yields, I can provide facilities, helping ease pressure on our bonds as the investor pool expands,” he said.

Purbaya described the initiative as a strategic step that could be realised in the near term.

He said the Finance Ministry has been asked to take part in developing the IFC alongside the Coordinating Ministry for Economic Affairs and sovereign wealth fund Danantara.

He said the legal framework, including tax incentives to be applied in the financial zone, will align with international standards.

Earlier, Coordinating Minister for Economic Affairs Airlangga Hartarto said the development of the Kura Kura Bali Special Economic Zone is being accelerated as a potential site for a financial hub.

The government is finalising regulations for the financial special economic zone to support a financial centre, including governance frameworks and investor-friendly facilities.

-- BERNAMA

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