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Economic Impact Analysis of the 2012 Indonesia Mineral-Export Tax Policy: A CGE Approach

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  • Amir, Hidayat

Abstract

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 macrolevel, 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.

Suggested Citation

  • Amir, Hidayat, 2013. "Economic Impact Analysis of the 2012 Indonesia Mineral-Export Tax Policy: A CGE Approach," MPRA Paper 62669, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62669
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    File URL: https://mpra.ub.uni-muenchen.de/62669/1/1_Amir_IJEPS2013.pdf
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    References listed on IDEAS

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    1. Amir, Hidayat & Asafu-Adjaye, John & Ducpham, Tien, 2013. "The impact of the Indonesian income tax reform: A CGE analysis," Economic Modelling, Elsevier, vol. 31(C), pages 492-501.
    2. Olga Solleder, 2013. "Trade Effects of Export Taxes," IHEID Working Papers 08-2013, Economics Section, The Graduate Institute of International Studies.
    3. Waschik, Robert & Fraser, Iain, 2007. "A computable general equilibrium analysis of export taxes in the Australian wool industry," Economic Modelling, Elsevier, vol. 24(4), pages 712-736, July.
    4. Mohamad F. Hasan & Michael R. Reed & Mary A. Marchant, 2001. "Effects of an Export Tax on Competitiveness: The Case of the Indonesian Palm Oil Industry," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 26(2), pages 77-90, December.
    5. Piermartini, Roberta, 2004. "The role of export taxes in the field of primary commodities," WTO Discussion Papers 4, World Trade Organization (WTO), Economic Research and Statistics Division.
    6. Kian Thee, 2009. "The Indonesian wood products industry," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 14(2), pages 138-149.
    7. Gelan, Ayele, 2004. "System-wide Impacts of Agricultural Export Taxes: A Simulation Experiment with Ethiopian Data," MPRA Paper 1490, University Library of Munich, Germany.
    8. Rifin, Amzul & Nauly, Dahlia, 2013. "The Effect of Export Tax on Indonesia’s Cocoa Export Competitiveness," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152175, Australian Agricultural and Resource Economics Society.
    9. Arief Anshory Yusuf & Djoni Hartono & Wawan Hermawan & Yayan, 2008. "AGEFIS:Applied General Equilibrium for FIScal Policy Analysis," Working Papers in Economics and Development Studies (WoPEDS) 200807, Department of Economics, Padjadjaran University, revised Oct 2008.
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    Cited by:

    1. Ragimun Abdullah & Haula Rosdiana & Milla Sepliana Setyowati, 2021. "Strengthening of the Coal-Gasification Industry: Evidence from Indonesia," Journal of Economics and Behavioral Studies, AMH International, vol. 13(5), pages 55-62.
    2. Hidayat Amir & Ferry Irawan & Djoni Hartono & Anda Nugroho, 2015. "The Development of Fiscal Social Accounting Matrix for Indonesia," Working Papers in Economics and Business 201506, Faculty of Economics and Business, University of Indonesia, revised Oct 2015.

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    More about this item

    Keywords

    CGE model; mineral export tax; fiscal policy;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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