Economic Impact Analysis of the 2012 Indonesia Mineral-Export Tax Policy: A CGE Approach
In May 2012, the Indonesian government implemented a series of new mineral export restrictions: (1) Regulation of Minister Energy and Mineral Resources (MEMR) No. 7/2012 to ban export of unprocessed metals and non-metallic minerals, and then revised by Regulation of MEMR No. 11/2012; (2) Regulation of Minister of Trade (MOT) No. 29/M-DAG/PER/5/2012 to clarify the position on exports of unprocessed minerals and ores; and (3) Regulation of Ministry of Finance (MOF) No. 75/PMK.011/2012 to impose export tax on these commodities. The main objective of these series of regulations is to increase the value added of the domestic processing industries as stipulated by Law No.4/2009, through giving incentives to mineral processing industries and disincentives (impose tax) on unprocessed mineral exports.
This study analyses the impact of these new mineral export restriction policies on the Indonesian economy within a computable general equilibrium (CGE) framework. The model’s database is consolidated from three key data sources: (a) the 2005 Indonesian Input-Output (IO) Table; (b) the 2005 Indonesian Social Accounting Matrix (SAM); and (c) the 2005 National Socioeconomic Survey (Susenas). All the data were published by BPS-Statistics Indonesia. This study investigates how the export tax policy affects the country’s economy not only at a macro-level, such as the impact on economic growth, industrial output, and employment, but also at a micro-level, such as impacts on poverty and income distribution.
Key wordsCGE model mineral export tax fiscal policy
JEL ClassificationC68 E62 F13
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The author is grateful to Djaka Kusmartata (Head of Customs and Excise Policy, Fiscal Policy Agency) for useful inputs and warm discussion during the preparation of the paper. I also wish to thank Associate Professor Kazuyuki ISHIDA (Tokushima University), participant of the 11th International Conference of the Japan Economic Policy Association and two anonymous referees who gave valuable comments on this paper.
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