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Starting in 2023, the government plans to tax the export of nickel-derived products. The export tax or duty rate on nickel-derived products such as nickel pig iron (NPI) and ferronickel (FeNi) is 2% of the export value.
We should note that the main reason behind the government's plan to impose export duties on nickel exports is to increase state revenue. In 2022, the world nickel price experienced a high surge, reaching USD 20,000 per ton. At the same time, Indonesia is the largest nickel producer in the world, with a production value of 1,600,000 metric tons (CNBC, 2023). As if not wanting to miss the momentum, the government plans to tax the export of nickel derivative products. The world nickel production during 2022 is as follows:
Another reason behind the plan to impose export duties is to encourage the fulfillment of domestic nickel needs and support the development of the electric vehicle ecosystem. At that time, the price of nickel in the international market was higher than the domestic market. So, the smelter industry is more interested in selling its products internationally than in the domestic market. The domestic battery industry needs nickel support as a raw material for electric vehicle batteries.
Moving on from these matters, the government discussed export duties on nickel derivative products, especially nickel pig iron (NPI) and ferronickel. However, until now, the plan has not been realized.
The Coordinating Ministry for Maritime Affairs and Investment said that later on, the price of nickel on the international market will experience a drastic decline because of the weakening global demand, which in turn led to an oversupply of nickel derivative products (Kumparan, 2023). The development of the nickel reference price during 2023 is in the following graph:
Source: (Katadata, 2024)
Based on that fact, the government still reviews the implementation of export duties on nickel derivative products. Moreover, the government is currently filing a lawsuit with the World Trade Organization (WTO) over Indonesia's defeat in the dispute over the nickel ore export ban.
Note that in 2022, European countries filed a lawsuit with the WTO over Indonesia's policy to ban nickel ore exports. This nickel ore ban policy has more or less affected European countries. Therefore, these countries filed a trade lawsuit with the WTO. Unfortunately, Indonesia lost the lawsuit. Not wanting to remain silent, the Indonesian government filed a lawsuit against the WTO decision.
Based on Law Number 10 of 1995 concerning Customs, as last amended by Law Number 17 of 2006, among others, stipulates that export duties are state levies based on customs laws imposed on exported goods. Furthermore, this provision also regulates that export duties are imposed on exported goods to ensure the fulfillment of domestic needs, protect the preservation of natural resources, anticipate a drastic increase in the price of certain export commodities on the international market, or maintain the stability of prices of certain commodities in the country.
There are two ways of calculating export duty:
- if the export duty rate is determined based on a percentage of the export price (advalorum), the calculation is by multiplying the export duty rate by the number of units of goods, the export price per unit of goods, and the currency exchange rate.
- if the export duty rate is determined specifically, the calculation is by multiplying the export duty rate per unit of goods in a specified currency unit by the number of units of goods and the currency exchange rate.
Several studies show that the implementation of export duties effectively suppresses commodity exports. Research conducted by Syadullah (2012), for example, shows that the implementation of export duties on plantation commodities effectively reduces commodity exports and increases the commodity processing industry in the country. Another study conducted by Rohmawati and Verico (2022) showed that an increase in export duty tariffs significantly reduced the volume of Indonesian exports to the European Union.
Considering the drop in the reference price of nickel and the abundant supply of nickel derivative products nowadays, it seems that the policy taken by the current government is appropriate. Remember that the government is facing legal issues at the WTO and that the price of tin is falling. Thus, imposing export duties on nickel derivative products is feared to weaken Indonesia's position in international trade arbitration.
