The Indonesian government is ramping up efforts to boost state fiscal revenue, with the mineral and coal mining sector as one of the key targets. Measures include royalty rate hikes and the imposition of export duties to drive revenue growth. This year, the government has already raised royalties for coal, nickel, copper, gold, and bauxite. Looking ahead to 2026, it also plans to introduce export duties on coal and gold.

Ferdy Hasiman, Executive Director of Indonesia Mining and Energy Watch, notes that these policies are indeed effective and have the potential to expand state revenue streams. However, their implementation is questionable as they are not systematically designed. He points out that the government’s policy approach tends to be reactive: when state revenue declines, it immediately raises various levies without considering the full impact. “From a corporate perspective, such policies are unattractive and risk creating inequity,” Ferdy told Bisnis on Thursday (18/12/2025). Mining companies already bear significant royalty burdens, plus other taxes outside of royalties.

On another front, the government mandates companies to build smelters—for example, copper smelters requiring investments ranging from tens to over 60 trillion rupiah. Ferdy argues that economically, such smelter projects are not fully viable but proceed due to legal obligations. Yet smelter construction has a large multiplier effect: it boosts value-added, local economic growth, and downstream industry development. However, Ferdy believes that once companies meet their smelter construction obligations, the government should provide incentives to expand these economic benefits. “Once obligations are fulfilled, the government should offer incentives instead of adding more burdens. Heavier burdens make the sector less attractive to companies,” he says.

He further urges the government to quickly develop a more comprehensive mining industrialization framework. Currently, most smelters produce intermediate products, while advanced downstream industries are not yet ready. “Properly directed advanced downstreaming could boost sustainable state revenue,” he explains. As a middle ground, Ferdy suggests royalty or export duty hikes should be proportional and done through dialogue with producers. This way, the government can find a fair balance: when companies profit, state revenue rises without pushing firms into losses or bankruptcy (which would reduce jobs).

“Companies that have already downstreamed should get incentives to move deeper into downstream industries. The economic impact is huge, but the government often overlooks this,” he concludes. Ferdy emphasizes that policies to boost state revenue via royalty hikes have good intentions, but without a well-thought-out, balanced design, they risk suppressing businesses and weakening long-term economic foundations.

Similarly, Bisman Bakhtiar, Executive Director of the Center for Energy and Mining Law Studies, says th...