The government has decided to postpone Ferronickel (FeNi) and Pig Iron (NPI) taxes, because the government is waiting for a balance point between nickel sales volume and prices.
Luhut Binsar Pandjaitan, Indonesia’s Coordinating Minister for Maritime Affairs and Investment, explained that the amount of export tax for Ferronickel and Nickel Pig Iron is still being prepared. He added that the government is not in a hurry to determine these taxes.
“So yesterday maybe we were quick to give [announcement about the export tax] because we saw that the price was good, right now the production volume is too high, so the price is going down. We want to bring the equilibrium, again calculating it carefully,” Luhut said on May 9, 2023, as reported by industri.kontan.id.
Luhut added that the Indonesia Nickel Prices Index will be used as the basis for buying and selling nickel in the domestic market.
Smelter businesses responds
In relation to the government’s plan to establish determine export taxes for Ferronickel and nickel pig iron, smelter businesses urged the government conduct an identification before imposing export taxes.
Haykal Hubeis, Secretary General of the Association of Processing and Refining Industry Companies (AP31) said that initial identification needs to be carried out as a basis for imposing an export tax policy.
Haykal argued that an identification is required because the nickel smelter industry is experiencing a different situation from one another, because many smelters have not been able to achieve a return on investment.
“There are smelters that have been successful, production has multiplied, yes that is fine to be [taxed], but there are other smelters that have only just reached a certain level of profit,” explained Hubeis, as reported by industri.kontan.co.id.
In addition, the plan to impose export taxes is still based on commodity prices which are still quite high. With that, the government needs to consider future price fluctuations.
“I think it might be gradual, you can’t be sure that it has to be above 10% or 15% or 20%. But I think 10% is still okay, above that it’s already sensitive,” added Hubeis.
