Increasing Tax Obligation for Coal Miners Amidst Pandemic Covid-19 is Not A Wise Decision

ICMA WEBSITES – EDITORIAL (6 AUGUST 2020)

Increasing Tax Obligation for Coal Miners Amidst Pandemic Covid-19 is Not A Wise Decision

As is well known, the national economy is in a very difficult situation, especially since the growth data in the second quarter of 2020, the economy contracted -5.3%, the first deficit we experienced in the last 2 decades. At the industrial level, almost all industries are experiencing a very tough situation including the coal mining industry where the Reference Coal Price (HBA) is at its lowest level in the last 10 years. Future conditions for commodity prices have yet to show improvement due to weak demand.

Under current conditions, all coal mining companies, both PKP2B and IUP holders, are in "survival mode" struggling to survive. The condition of "survival mode" is the company striving at least by continuing to carry out financial and taxation obligations to the country, contribute to the development and empowerment of the community, carry out reclamation and environmental management and as far as possible do not terminate employee employment (FLE). The above commitments are carried out by APBI member companies even though they experience difficulties in managing cash flow (cash flow).

The condition of some companies is currently very tough where some companies whose mining age is old (marginal) with large stripping ratios make the “cost to vessel” very high which makes the net profit margin (NPM) very thin and tends to be economically unattractive. . Companies can be helped to survive in the current "survival mode", among others, because the price of oil (fuel cost) is very low and the willingness of contractors to reduce prices as low as possible. If the price starts to rise, the contractor will incrementally increase the price so that the NPM is not linear with the increase in the coal price index.

With such conditions, in our opinion, efforts to increase state revenue through an increase in royalty rates that will be applied to both PKP2B and IUP holders are not quite right. In fact, in the midst of the current difficult situation in the Covid-19 Pandemic, we hope that the government will immediately issue policies that help business actors to maintain their business continuity.

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