Minister Arifin Tasrif Responds to Protests on New DHE Regulations

Indonesia's import and Exports
Indonesia's import and Exports

Minister of Energy and Mineral Resources, Arifin Tasrif, has addressed the concerns raised by mineral and coal mining entrepreneurs regarding the new regulations concerning the placement of Export Proceeds (Devisa Hasil Ekspor or DHE) from Natural Resources.

This development comes as the government introduced Government Regulation (PP) Number 36 of 2023, revising the previous regulation, PP No. 1 of 2019, which specifically pertains to DHE obtained from managing, operating, and/or processing natural resources.

The mining entrepreneurs have expressed their grievances, highlighting potential obstacles and deviations that may arise due to the lengthy bureaucracy and cash flow implications associated with the new regulations.

In response to these concerns, Minister Arifin Tasrif reassured entrepreneurs that the new regulations have well-defined mechanisms in place to prevent financial stagnation.

He stated, “No (cash flow impediment). The mechanism is there,” emphasizing the clarity and effectiveness of the system during an interaction at the Ministry of Energy and Mineral Resources office in Jakarta on Friday, July 28, 2023.

Furthermore, Minister Arifin emphasized the importance of reaching a win-win solution that benefits both the government and mining entrepreneurs.

He stated, “Definitely (there will be a win-win solution). We won’t leave them empty-handed. But we ask the entrepreneurs to help us and understand,” underlining the government’s commitment to addressing the concerns while promoting collaboration with the mining sector.

Additionally, Minister Arifin pointed out the prevailing practice where many entrepreneurs have historically stored DHE overseas. Despite the booming prices of mineral and coal commodities, Indonesia has not fully benefited from these proceeds due to them being kept abroad. The new regulations aim to strengthen Indonesia’s foreign exchange reserves, thereby positively impacting the nation’s financial landscape.

With the goal of encouraging entrepreneurs to retain DHE domestically, Minister Arifin revealed that his office has devised a competitive scheme to incentivize them to comply with the new regulations.

He highlighted the need for Indonesia to capitalize on its resources and maximize the potential benefits for both the country and the entrepreneurs involved.

However, it is worth noting that the new regulations have been met with objections from some quarters, including Djoko Widajatno, the Acting Executive Director of the Indonesian Mining Association (IMA).

Djoko voiced concerns about the regulations’ consistency with existing provisions in Law Number 24 of 1999, which pertains to free foreign exchange transactions. He contended that PP 36/2023 might disrupt the established liquidity of businesses as prescribed by the pre-existing law.

The DHE regulation, set to take effect on August 1, 2023, requires coal exporters to retain a minimum of 30% of export proceeds in a Special Account for at least three months from the date of placement. Furthermore, the regulation imposes a minimum export value of at least US$ 250,000 or its equivalent for DHE sourced from natural resources.