Member of Commission XI of the Indonesian House of Representatives, Syarif Fasha, revealed that the Work Plan and Budget (RKAB) in the mining sector is formulated based on parliamentary recommendations aimed at increasing the industry's fiscal contribution. Currently, mining contributes only about 10% to 15% of reported profits.
During a hearing at the Parliament Complex in Jakarta on Monday, January 19, 2026, Syarif explained to the President Director of PT Vale Indonesia that the commission has taken note of complaints from several companies, including Vale, regarding RKAB issues. He stated that while public concerns are understood, the context behind the government's approach and the input provided by the House of Representatives must also be considered.
He further elaborated that a key issue with RKAB is that many approved production quotas in the documents are set too high and do not align with companies' actual exploration and operational capacities. Some companies have been granted quotas ranging from millions to tens of millions of tons per year, yet their actual output only reaches 10% to 15% of the allocated quotas.
Members of Commission XI have also raised concerns over unfulfilled production quotas, suggesting that this situation could pose governance risks. Unused quotas might potentially be exploited for non-compliant activities. One member pointed out that if only about 10% of quotas are realized, the remainder could be circulated through other channels, undermining the effectiveness of RKAB as a control mechanism.
Syarif emphasized the need to tighten RKAB regulations to ensure that mining companies' operational costs are balanced with their contributions to state revenue. He specifically mentioned that financial reports from state-owned mining companies should reflect a more reasonable balance between revenue and expenditure. He expressed hope that state revenue should at least match the profit levels reported by state-owned enterprises, rather than the current imbalance where operating costs account for 80% of profits and state revenue only around 24%.
The politician from the Nasdem Party also noted that while the government has currently granted a temporary grace period until March or April, stronger oversight is still needed to promote compliance and governance improvements in the mining sector. He concluded by stating that after the extension period, policy implementation must be ensured, and companies adhering to the regulations should be evaluated to genuinely enhance government effectiveness and state revenue.
Written by Cora Ji, jiruyan@mysteel.com
