Indonesia’s coal production increased 16 percent in 2004, despite continueduncertainty in the mining industry over legal and tax issues. China’s decision to halt coal exports, coupled with rising Japanese and Korean coal imports, caused the production increase by raising international coal prices. High tax rates, divestment concerns and the lack of a new mining law contribute to uncertainty in the coalsector, although Chinese and regional companies continue to show interest. Indonesia has abundant resources and potential, but a comprehensive new mininglaw, clear regulations and investment-friendly policies are needed in order to maintain production, coal reserves and Indonesia’s strong position in the global market.