JAKARTA Indonesian industry groups on Monday welcomed the decision to delay the implementation of the planned carbon tax for the second time this year, citing unclear regulations and unfavorable economic conditions for such a move.
In Indonesia's carbon tax was due to take effect in April after the passage of a tax law last year that included the provision, with coal-fired power plants targeted as a first phase of the implementation as the country aims to meet carbon-cutting targets.
The government initially decided to delay it to July 1, citing the need for technical guidelines. The finance ministry said last week that another delay is unavoidable without a new date.
Febrio Kacaribu, head of the Fiscal Policy Agency at the ministry, told reporters on Thursday that "we still need to be prepared for global fluctuations." We still need to perfect our carbon market scheme. The government is considering reviewing the July 2022 implementation of the carbon tax because of the current conditions. Hendra Sinadia, executive director of the Indonesian Coal Mining Association, said on Monday that industries in general don't think the planned implementation has been rushed. Sinadia said that many details aren't clear, including if and how coal-fired plant operators will pass on the extra cost to coal mining companies, their suppliers and electricity consumers.
State-owned utility company Perusahaan Listrik Negara is the biggest operator of coal-fired power plants in Southeast Asia's largest economy. The government is trying to control inflation despite the soaring coal prices due to supply disruptions from the Russia-Ukraine war.
Sinadia said coal mining companies and other industries that produce emissions - such as transportation, cement makers and food producers - are still in the dark as to when the carbon tax will be applied directly on them. He told Nikkei Asia that not only us coal miners are waiting, but everyone is.
Shinta Kamdani, deputy head of the Indonesian Chamber of Commerce and Industry, said it was not the right time to introduce new taxes, as slower growth is projected in domestic and global economies.
Kamdani said that if we miscalculate, our economy would grow stagnant in the second half of 2022, our economy could grow stagnant, according to local news portal Kontan. We really appreciate the decision by the government to delay the implementation of the carbon tax and excise tax on some products. The excise on sugary drinks and plastic packaging has been delayed by the government this year.
Under its own efforts, the carbon tax is intended to help Indonesia reach its goal of reducing emissions by 29% by 2030 and 41% with international support. The carbon market scheme is being developed by the government to run parallel to the fiscal effort.
We introduced. Finance Minister Sri Mulyani Indrawati said earlier this year that the carbon tax was a policy instrument to encourage the private sector to internalize the consequences of their economic activities in terms of carbon emissions and include those in their investment calculations.
She said that the economy is still recovering and that the government emphasizes the affordability aspect. Timing and pace of adjustment are very important.