Indonesia expects a year of focus on economic growth

The Indonesian Parliamentary and Presidential elections in 2014 have resulted in a new President, Joko Widodo and a new Cabinet. According to a local expert, the appointment of a new Mines and Energy Minister, Sudirman Said, was broadly welcomed by the industry as he brings solid credentials from both the public and private sectors. In fact, one of his previous positions was at a senior corporate level in an Indonesia coal group.

The nationalism ideals that were used in the 2014 elections are now largely muted and it can be expected that there will be no changes in the laws and regulations regarding foreign investment in the coal industry. The new administration has so far focused on economic and infrastructure development. On the energy front, one of the key aspects is a plan for considerable growth in power production based on coal-fired power plants. It is believed that domestic demand for coal will continue to grow, particularly in two to three years time when more new plants come on line.

The new Government has also already relaxed the caps on coal production levels. The increase of mining royalties, as proposed but not implemented in 2014, is still being considered. However, the Government recognises that such increases at the present time may lead to more mine closure with resultant unemployment, and less value flowing to mining communities. Overall, the Indonesian coal industry expects that in 2015 there will be limited, if any, increase in regulation of the industry, possibly streamlined in some areas, a small production increase, continuing emphasis on coal supply to the domestic market with a resultant flat, or decline, in export levels. But the caution is that the new administration has just taken office and has yet to detail all their requirements.

Edited from source by Joe Green

Source: WCA

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