ICMA: New DHE policy could disrupt miners’ cash flow

The Indonesian Coal Mining Association (APBI/ICMA) has raised concerns over potential cash flow disruptions for mining companies resulting from the proposed new DHE policy. The policy mandates that exporters of natural resources, including coal miners, deposit at least 30% of their export earnings in domestic banks for a minimum of one year, up from the current three-month period.

Gita Mahyarani, Acting Executive Director of ICMA, stated to BloombergTechnoz.com, “The inability to reinvest sales proceeds for contractor payments, vendor settlements, and other expenses presents a significant challenge.” He warned that such restrictions could hinder miners' ability to invest and procure equipment, exacerbating operational difficulties amid rising costs.

ICMA has urged the government to consider the potential impact on the mining industry while reiterating its commitment to complying with regulations. “We strive to adhere to government rules. Currently, the three-month DHE retention rule is in place, and our members are already compliant,” Gita said.

Coordinating Minister for Economic Affairs Airlangga Hartarto confirmed that the government plans to extend the deposit period under the new DHE policy to at least one year but emphasized that the policy is still under review. Regulatory details are expected soon.

Read also : Government to extend retention period for export earnings

 “The DHE will be retained for a longer period, at least one year, but it is still under review,” Airlangga stated on January 8, 2025.

The proposed change aims to boost Indonesia’s foreign exchange reserves, though Airlangga did not provide a timeline for its implementation. He also assured that the government, in coordination with Bank Indonesia and commercial banks, is preparing attractive incentives for exporters as compensation for the extended retention period.

Record forex reserves

Luhut Binsar Pandjaitan, Chairman of the National Economic Council, claimed that Indonesia’s foreign exchange reserves, which reached $155.7 billion in December 2024, could hit an all-time high due to the DHE policy.

While acknowledging that the rupiah has recently weakened due to the strengthening U.S. dollar, Luhut pointed out, “Our foreign exchange reserves are the highest in Indonesia’s history, partly due to the DHE policy, which also impacts the rupiah. Although the dollar’s strength has pressured the rupiah, our currency remains relatively stable,” he said on January 9.

Editing by Reiner Simanjuntak