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oal miners have suggested that the government apply a production quota instead of implementing an export tax in order to prevent over-exploitation.

Supriatna Suhala, executive director of the Indonesian Coal Mining Association (APBI), said in Jakarta on Tuesday that a production quota for each company would be more acceptable than the export tax since coal miners currently paid different levels of tax to the government.

“For the first generation contracts of work [known as PKP2B], the royalty is 30 percent plus corporate tax at 45 percent, while for mining permits [IUP], issued after 2009, the royalty is only between 13.5 percent with 25 percent corporate tax,” he said.

“If the government applies the export tax, the first generation contract holders will be heavily burdened, they may also bring the regulation to arbitration. The export tax is a good idea as long as all companies are on a level playing field,” he continued.

The government had to study the plan very carefully, Supriatna urged. The association had sent a letter to the Finance Ministry’s fiscal agency to explain the situation faced by coal-mining companies, he added.

Imposing a production quota would be a better way to preserve Indonesia’s coal reserves, he suggested. He argued that the government had to set a national production quota and divide it among the existing coal-mining companies.

“Existing companies continuously expand their production and new companies arrive,” Supriatna emphasized.

However, he said the best way to utilize the country’s coal reserves was to burn them in mine-mouth power plants so that they supported economic growth and raised people’s living standards.

The Energy and Mineral Resources Ministry’s coal director, Edi Prasodjo, revealed that new regulations on coal mining and trading were currently under discussion and he could not comment on the progress.

He acknowledged that the increasing pace of coal production was indeed worrisome. The situation was made worse by the fact that most of the production was exported because domestic consumption was still very low, he added.

“I predict, next year, our production will hit 450 million tons,” Edi reported.

In the first quarter, APBI said, Indonesia’s coal production hit 108 million tons. Last year, the production was 370 million tons.

The government has already applied a 20 percent export tax on 14 mineral commodities, namely antimony, bauxite, chromium, copper, gold, iron ore, iron sand, lead, manganese, molybdenum, nickel, platinum, silver and tin.

Energy and Mineral Resources Minister Jero Wacik has said the government will also issue regulations to control coal production and trading.

The government has also issued a regulation limiting foreign ownership of mines to only 49 percent. The regulation will apply to mining permits, including for coal, issued after the regulation was approved on Feb. 21 this year.