Indonesia’s commitment to increasing its value-added exports has proven to be a vast boon to the economy, with the country set to see at least US$14.83 billion of realized investment in the construction of mineral and palm-oil refineries, the Investment Coordinating Board (BKPM) says. Of the prospective investment
Indonesia's commitment to increasing its value-added exports has proven to be a vast boon to the economy, with the country set to see at least US$14.83 billion of realized investment in the construction of mineral and palm-oil refineries, the Investment Coordinating Board (BKPM) says.
Of the prospective investment plans, the construction of mineral-smelting plants and palm-oil refineries would greatly support economic growth as the amount set was equal to around one-third of the annual realized investment target this year, BKPM chairman Mahendra Siregar said.
Mahendra predicted that total realized investment in local smelters could even jump threefold within the next two or three years if the Mining Law was imposed consistently.
Indonesia has decided to go ahead with its controversial plan to ban exports of raw ores beginning this year in line with the 2009 Mining Law, which stipulates that mineral products should first be processed in local smelters before being shipped overseas for export.
Due to a lack of smelting facilities, mining companies are allowed to export semi-finished mineral concentrates until the end of 2016, albeit with a higher export-tax obligation. Beginning 2017, ores should be fully refined in local smelters.
The law was met by strong opposition from foreign-based mining firms operating here, which insisted that building smelters was commercially unfeasible.
Mahendra said the law had so far proved capable of encouraging local industries to process their raw ores domestically, as evinced by the surge in realized investments in the building of smelters.
The mining sector accounted for around 20% of total realized foreign direct investment (FDI) in Indonesia last year.