MOT and MEMR Regulate Coal Export
On July 15, 2014, the Minister of Trade (“MOT”) issued Regulation Number 39/M-DAG/PER/7/2014 on Provisions on Export of Coal and Coal Products (“MOT Regulation”), which comes into force on October 1, 2014.1 One of the purposes of this regulation is to prevent overexploitation and ensure the domestic supply of coal and coal products, including anthracite, bituminous, subbituminous, lignite, coking coal, coal gas and other derivative products. To enable implementation of the MOT Regulation, the Directorate General of Minerals and Coal (“DGMC”) of the Ministry of Energy and Mineral Resources (“MEMR”) issued Regulation Number 714.K/30/DJB/2014 on Procedures and Requirements for Granting Recommendations for Registered Exporter of Coal.
The regulations require coal companies to obtain a recommendation from the MEMR and recognition as a Registered Exporter of Coal (Eksportir Terdaftar Batubara – “ET-Coal”) from the MOT’s Directorate General of Foreign Trade (“DGFT”) in order to be permitted to export coal or coal products. The new requirements yielded considerable criticism from coal companies due to the narrowness of the September 1, 2014, deadline, so the MEMR extended the deadline to October 1.
♦ Registered Exporter Status to Export Coal and Coal Products
Coal companies who intend to export coal or coal products must apply to the DGFT for recognition as ET-Coal by submitting (i) a copy of the mining license (IUP or IUPK)2 or Coal Contract of Work (“CCOW”), (ii) basic corporate documents,3 and (iii) a recommendation from DGMC., The recognition as ET-Coal is valid for 3 years.
To obtain an ET-Coal recommendation from the DGMC, the applicant must submit (i) copies of clear and clean certificate and coal mining license, special mining license or MEMR Decree concerning stages of production operation for CCOW holders, (ii) approval letter of the current year work plan and budget (RKAB), (iii) proof of payment of non-tax state revenue (PNBP), and (iv) certification that the company will pay production fees (DHPB) at the point of sale FOB before the shipment is transported across the regency/city/province/country. The recommendation will be issued within 5 working days and is valid for 3 years.
♦ Verification and Technical Examination
The MOT Regulation reiterates that every export of coal or coal products must be administratively verified and technically examined by a licensed surveyor appointed by the MOT. Verification and technical examination considers:
- region of origin of coal/coal products
- quantity, type, and tariff (Pos Tarif/HS Code) of coal/coal products
- calorific value of coal
- shipping time
- port of loading
- country and port of destination
- proof of payment of production fee/royalties
The costs incurred for verification and technical examination are to be paid from public funds, but the government reserves the right to shift the costs to the exporter if public funds are not available.
♦ Reporting and Sanctions
The results of verification and technical examination are compiled in a Surveyor Report (laporan surveyor -“LS”), and surveyors must report monthly recapitulations to the MOT. Evidence of ET-Batubara and LS are used as supporting documents for Export Declarations (Pemberitahuan Ekspor Barang – PEB). Companies holding ET-Coal are required to report export activity monthly to the DGFT, with copies to DGMC, by the 15th of the following month. Export activity reports must also be submitted online through http://inatrade.kemendag.go.id.
Failure to meet reporting obligations can lead to revocation of ET-Coal or appointment as a Surveyor. Other sanctions can be imposed in accordance with applicable laws and regulations. In addition, the DGMC can evaluate the ET-Coal recommendation annually and can propose revocation of ET-Coal if it detects violations.
1 MOT Reg. No. 49/2014 amended Art. 21 of the MOT Regulation to extend the effective date to Oct. 1, 2014.
2 Production Operation IUP, Production Operation IUPK, Production Operation IUP specifically for transportation and sale, or Production Operation IUP specifically for processing and refining.
3 Taxpayer registration number (NPWP) and company registry (TDP).
September 19, 2014ARFIDEA KADRI SAHETAPY-ENGEL TISNADISASTRA
The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information here in is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
- September 19, 2014