ICW, KPK, and ICDX Secures Indonesian Tin Royalty

From watchingthe social media conversation between an anti-corruption activist friend with those who are against the presence and the actions of ‘Komisi Pemberantasan Korupsi’- KPK (Corruption Eradication Commission), I too become intrigued with the action of Indonesia Corruption Watch – ICW. This caused a question in my mind, does ICW collaborates with KPK and contributes to the eradication of corruption in this country? Is ICW making any efforts to push down the number of corruption in this country?

ICW, KPK, and ICDX Secures Indonesian Tin Royalty

From this interesting question in my mind, I also tried to explore several information regarding ICW in Ms.Google. From my exploration, I found a research article on ICW titled; "Praktek PenjualanI legal & Indikasi Kerugian Negara dariEksporTimah 2004 -- 2015." (The Practice of Illegal Selling & Country Loss Indicator from Tin Export 2004-2015)" (source)

The ICW research paper was released not too long ago on the 16th of March 2017. And from the several sources listed by ICW, made me curious even more. What is ICW’s role on the mining and trading of tin in Indonesia?

From the conclusion and recommendation made by ICW in the paper, the tin trade in Indonesia actually hides rotten ulcers that has been continuing for decades. There were many stakeholders that are involved in the illegal tin trade, causing a national loss from the receipt of royalty and taxation reaching Rp 5,714 billion. What a fantastic number!

This ICW research paper for the period 2004-2015 reports that the national loss from the obligational tin royalty (3%), is valued at Rp 2,066 billion. Meanwhile, from income tax, there is a national loss of Rp 3,648 billion.

Why is there a national loss from tin trading reaching Rp 5,714 billion?

ICW’s research again opens the facts that many ‘officials’ in rural or central areas, took part in the illegal mining and trading of tin. On the other hand, there is a legal loophole that could be taken advantage of to preserve the business of illegal mining and trading of tin.

Tin Exchange

To suppress illegal tin mining, the government has introduced a legal device through “PeraturanMenteriPerdagangan No. 33 Tahun 2015”(Trade Minister’s Decree No.33 Year 2015), regarding the tin export provision. The Decree explains that tin export can only be done as a result of a transaction that took place in a tin exchange.

The Coordinator of the Monitoring Division and Budget Analysis, ICW, FirdausIlyas, in his testimony to the media, provided that the tin exchange could suppress the presence of illegal tin mining.

FirdausIlyas also provided that trading tin through a tin exchange could increase government income, especially from export royalties. Because it is known that illegal tin export is not accounted for, hence automatically, the government never received any royalty payment from those activities (source)

FirdausIlyas’statement could also be translated that if the tin exchange received full support from many stakeholders, then the national income from royalties and income tax will grow bigger. So that the government will have a budget that could be used to invest in developments, especially in the tin-producing areas. (From ICW data in the research paper, it is noted that tin royalty is split to the producing area (80% to producing area, 20% to central government)).

Tin Royalty

Referring to Permendag No.33 Year 2015, regarding the tin export provision, the tin exchange that was organised by Indonesia Commodity and Derivatives Exchange – ICDX since 30 August 2013, has a noble mission towards the sovereignty of Indonesia as a tin producing country and the largest tin exporter in the world. Its first mission is to govern trading transactions in a transparent and accountable way, promoting the prevention and control of the environmental damage due to massive illegal mining, by applying the use of the Clean and Clear Certificate – CnC.

Secondly, intensify the increase of national income from production fees – royalties and national tax. Thirdly, increasing added value of tin by raising the quality of tin stored, and raising the end-product focus in the tin industry within the country. Lastly, making ICDX Tin Exchange as the place of price formation and global tin price reference. (source)

ICDX’s data noted that royalties from tin traded through an exchange that is stored to the country for the period 30 August 2013 until 31 December 2016, has exceeded US$ 117,8 million or approximately Rp 1,53 billion (with an exchange rate of Rp 13,000 per American Dollar). While tin export from tin traded in ICDX in 2016 reaching US$ 1,141 billion with a transaction volume of 63,193.64 metric tonne.

Reflecting from ICDX’s data, it could be said that tin exchange has become a solution towards the business of illegal tin mining. On the other hand, tighter government regulations will further suppress the number of tin exploitation in Indonesia. So that Indonesia’s tin deposit will not be depleted quickly. Because, Indonesia is only the 5th largest owner of global tin deposit.

More importantly, uncontrolled tin exploitation will cause environmental damage and will, in the end, cause loss to all stakeholders, especially the local community of the tin producing areas (Bangka-Belitung).

The circle of academics also holds a view that if tin exploitation with a mean value of 60,000 tonne per year, then in 2020, Indonesia’s tin deposit will be depleted.

From my research compilation regarding ICW, I have come to a conclusion that ICW plays a part to translate unique problems in the community, especially illegal practices such as the business of illegal mining and trading of tin. Which, notably, is committed by or supported by government officials.

Thus ICW’s research could be an entrance for KPK to investigate which government official has dabbled in the tin mining sector. So that the National Move to Save Natural Resources engineered by KPK will not be in vain. In this point, I too had become sympathetic and support the presence of KPK to annihilate corrupt actions of government officials for the sake of the prosperity of the people and Indonesia’s sovereignty in the eye of the world.

To be read in full : https://www.kompasiana.com/ddy_purba/icw-kpk-dan-icdx-amankan-royalti-timah-indonesia_594526b42350df4aae5dea92