TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Analysis: Govt expands Simbara system to tackle illegal nickel, tin practices
Change Size
Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan stands in front of a row of national flags. (JP/Seto Wardhana)
I
n a push for better governance of the mining industry, the government has expanded the Mineral and Coal Information System (Simbara) to now cover nickel and tin toward future expansion to other minerals. The decision to expand the tracking system to the two commodities stems from a recent tin corruption case that incurred state losses Rp 271 trillion (US$17 billion).
Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan said the inclusion of tin and nickel in Simbara aimed to not only introduce better industry governance but also bring significant extra income from the two commodities through royalties of between Rp 5 trillion and Rp 10 trillion, excluding taxes.
The Simbara system integrates various government processes for mining businesses from the upstream to downstream, including the single identity number for all taxpayers, mining production plans, sales plans, sales verification, exports and port clearance, as well as fulfilling export obligations to nontax state revenue (PNBP) and foreign exchange earnings. Simbara interlinks the data systems of the Finance Ministry, the Energy and Mineral Resources Ministry, the Trade Ministry, the Transportation Ministry and Bank Indonesia.
Since its initial implementation for coal shipments in 2022, Simbara has maximized PNBP from coal by preventing various illegal practices in coal exports, such as illegal mining, royalty payment avoidance and document forgery.
According to Finance Minister Sri Mulyani, Simbara had saved potential PNBP losses of Rp 3.47 trillion from illegal coal mining and royalty avoidance, Rp 2.53 trillion from risk profiling coal entrepreneurs and Rp 1.1 trillion from outstanding receivables that would otherwise have been uncollected.
The government collected total nontax revenue of Rp 172.9 trillion from the coal and minerals industry in 2023, despite the decline in commodity prices that year. In 2022, the government collected PNBP from the mining industry totaling Rp 183.5 trillion, the highest so far.
Energy and Mineral Resources Minister Arifin Tasrif said his ministry was looking to broaden Simbara’s scope from coal to nickel and tin, and then to other minerals, including gold, bauxite and manganese, to boost income generation and better manage the nation’s mineral resources.
The ministry recently estimated that the country’s mineral and coal reserves were worth a whopping US$4 trillion, of which two-thirds derived from the coal sector alone. A shadow hangs over this vast resource wealth however, as the energy sector has been plagued by illegal mining and corruption, with the recent tin scandal being a case in point. This has raised concern about whether Indonesia can effectively tap and translate its minerals potential to benefit the nation.
What we’ve heard
Players in the oil and gas industry have noted that the expansion of Simbara to include nickel and tin commodities is driven by the widespread corruption and illegal export of these two commodities.
Although the government prohibits the export of nickel ore, illegal exports of this commodity remain rampant, primarily to China. The slow development of smelters domestically has prompted nickel miners to secretly export it abroad.
The imbalance between supply and demand in the nickel processing industry also fuels illegal exports. Moreover, demand from China has been on the rise. They are willing to purchase at higher prices compared to the price of nickel ore absorbed domestically.
Meanwhile, the government is building an electric vehicle ecosystem—including batteries for electric vehicles. The raw materials for these batteries come from nickel. Several officials, including Maritime Affairs and Investment Coordinating Minister Luhut Binsar Pandjaitan, are involved in the electric vehicle business. The company founded by Luhut, TBS Energi Utama, in collaboration with PT GoTo Gojek Tokopedia, established a joint venture named Electrum.
Thus, the presence of Simbara is expected to integrate the entire management of nickel into one ecosystem. In this way, the government can oversee the governance and transactions of nickel and tin to boost state revenue.
Another source added that Simbara will consolidate the data collection and supervision of documents, money, transport services, resource quantities, and goods in the mineral sector. The lack of data collection and oversight—including mining, processing, and refining permit data, as well as evidence of payment of non-tax state revenue (PNBP)—has led to rampant illegal tin mining in the field. This is another factor that drives the government to expand the use of Simbara for nickel and tin commodities.
Disclaimer
This content is provided by Tenggara Strategics in collaboration with The Jakarta Post to serve the latest comprehensive and reliable analysis on Indonesia’s political and business landscape. Access the latest edition of Tenggara Backgrounder to read the articles listed below:
Politics
- Deputy ministers: Jokowi bridges the future
- Military flexes muscle ‘to get back’ in business
- Recalculating Prabowo’s promise of free meals
- Is corrupt behavior normalized in Indonesia?
Business and Economy
- Govt forms illegal import task force to protect failing industries
- Indonesia narrowly avoids IT disaster, highlighting need for IT experts
- Jokowi calls for coconut downstreaming for bio aviation fuel
