Indonesia Coal Export Tax Stalls as Fiscal Push Clashes With Industry Risks

JAKARTA, Investortrust.id — Indonesia’s planned coal export tax has yet to take effect despite earlier expectations of a Jan 1, 2026 rollout, underscoring a widening debate over how far the government should go to restore state revenue without destabilizing one of its largest export industries.

The proposal gained traction after Finance Minister Purbaya Yudhi Sadewa said the coal sector was generating negative net revenue for the state because tax payments were outweighed by refunds.

“If I look at the net position, they pay taxes, pay income tax, pay royalties, but it is pulled back through restitution, so what I get is negative,” Purbaya said in Jakarta on Wednesday, Dec 31, 2025. “So I am subsidizing coal companies that are already very wealthy. Do you think that is fair?”

Purbaya said the policy was rooted in Article 33 of the 1945 Constitution, which mandates that natural resources be controlled by the state for the greatest public benefit.

He attributed the fiscal anomaly to the Job Creation Law, which reclassified coal as a taxable good and introduced incentives for downstream processing, forcing the government to refund value added tax to coal producers.

Those refunds are estimated to cost the state around Rp 25 trillion per year, equal to $1.55 billion, prompting the finance ministry to design an export duty as a corrective measure.

Under draft proposals still under discussion, the export tax would be progressive and linked to global coal prices, with indicative rates of 5 percent, 8 percent, and up to 11 percent at higher price levels.

However, the Energy and Mineral Resources Ministry has confirmed that the tax will not automatically apply from Jan 1, 2026, as technical regulations are still being finalized with the finance ministry.

Deputy Energy Minister Yuliot Tanjung said the levy would be issued through a finance ministry regulation and calibrated to coal price trends, which have recently weakened.

“Prices are volatile and currently trending down, and that is what we are evaluating,” Yuliot said in Jakarta on Friday, Jan 2, 2026.

Industry analysts warn that if implemented rigidly, the policy could hurt margins and global competitiveness, especially during a price downturn.

Commodity analyst and Traderindo founder Wahyu Laksono described the export tax as “a double edged sword” whose impact would depend on flexibility.

“Export costs will rise, making Indonesian coal more expensive in global markets,” Wahyu said. “When prices are weak, buyers can switch to suppliers such as Australia or India.”

He added that coal producers already face progressive royalties and non tax state levies, and that layering an export tax on top could deter new investment and exploration.

To avoid unintended consequences, Wahyu said industry groups have urged a threshold based approach, where the tax applies only when benchmark prices exceed certain levels.

“Below that threshold, the rate should be zero so companies can survive,” he said, adding that tariffs should also vary by coal quality and company scale.

Political backing for the plan has emerged in parliament, with lawmakers framing the export tax as a matter of fiscal justice.

“This export duty policy, which has yet to take effect, is a corrective step to ensure that our natural resources truly benefit the public, not just a handful of business elites,” said Jazilul Fawaid, chairman of the PKB faction in the House of Representatives.

Jazilul argued that coal producers had enjoyed windfall profits in recent years while environmental and social costs were borne by communities and the state.

“With export duties, we can make the industry more equitable and oriented toward public interest,” he said, urging major producers to accept higher contributions.

As inter ministerial talks continue, the coal export tax remains a live policy option rather than an immediate obligation, with its final shape likely to determine whether it strengthens fiscal sovereignty or undermines Indonesia’s coal sector at a delicate point in the price cycle.