Indonesian financial collapse due to Chinese smelters entering Indonesia

ILLUSTRATION. Faisal Batubara or better known as Faisal Basri is an economist and politician from Indonesia. Photo / KONTAN / Djumyati Partawidjaja

Reporter: Venny Suryanto | Editor: Yudho Winarto |

KONTAN.CO.ID – JAKARTA. The added value and state revenue from mining in Indonesia is in the spotlight. This is because policies to increase added value from mining are still not very strict in terms of taxation.

As a result, the revenues and revenues to the state from the mining industry and others are still small. “This is what we have to encourage related to tax reform. I guarantee 99.99% of us can get tens of trillions from the nickel and mining industry, even tin and copper,” explained UI economist Faisal Basri in an online conference, Thursday (3/9).

Faisal explained, in Indonesia itself, local mining companies are required to pay export duties and royalties, but smelter entrepreneurs are not charged.

This is because smelter entrepreneurs see enormous opportunities in Indonesia with less strict regulations and supervision. Thus, the international nickel price is US $ 40 per ton, while in Indonesia it is only US $ 20 per ton.

“So that many smelter companies from China can break event point (BEP) in just three years, they have been very profitable, ”said Faisal.

He also criticized that Chinese smelters could get raw materials in the form of nickel ore or ore at very cheap prices. So that companies from China get more profit if they build a smelter in Indonesia than in their home country.

Faisal also said that the already large profits were not subject to various taxes such as VAT (Value Added Tax), import duties on capital goods such as machinery, workers who were imported from China also used tourist visas instead of work visas, then exempted from PPh (Income Tax). individuals to foreign dues.

“So the state finances in Indonesia were collapsed due to Chinese smelters entering Indonesia. Because here, there are no fees, “he added.

So, according to him, downstream mining in Indonesia actually supports other countries’ industries, such as in China. Because with Chinese smelters in Indonesia, they can pocket all the profits without paying various taxes such as corporate tax because they get it tax holiday up to 25 years.

“The price of mines purchased by smelter companies is very cheap in Indonesia, so the profit is higher than in the home country, therefore foreign companies are flocking to our country,” he concluded.