Addressing mining critics<\/p>\n
The recent heated debate about the manner in which the
\nIndonesian government has licensed foreign companies to extract
\nthe country's mineral resources has apparently caused great
\nconcern for President Soeharto. This is apparent from his special
\ninstruction earlier this week to Minister of Mines and Energy
\nI.B. Sudjana to prepare an information program to brief the
\ngeneral public on the government's mining policy.<\/p>\n
Never before has the government's mining policy come under
\nsuch scrutiny and sharp criticism by analysts and politicians as
\nthat sparked by the battle for the control and ownership of huge
\ngold deposits at Busang in East Kalimantan. The debate on the
\nBusang mine later broadened to what critics called the
\nquestionable benefits of the mining policy for the public's
\nwelfare. What made the issue more appealing was the controversy
\nit raised and the old issues that resurfaced concerning the huge
\ncopper and gold mine developed in Irian Jaya by Freeport-McMoran
\nof the United States in the late 1960s.<\/p>\n
What seemed to have triggered the President's concern, given
\nhis determination to do everything strictly according to the
\nConstitution, was the critics' allegations that the exploitation
\nof mineral resources had not conformed with Article 33 of the
\nConstitution. This article stipulates that the exploitation of
\nnatural resources be made to the greatest benefit of the people.<\/p>\n
It seemed strange, however, that it was former mining
\nofficials such as Mohammad Sadli, Soetaryo Sigit and Rahman
\nWiriosudarmo, and not the incumbent ones, who aggressively tried
\nto enlighten the general public of the real issues in the mining
\nsector. One might suspect their comments on the positive points
\nof the mining policies were simply designed to defend their
\nreputation as they had played a major part in the formulation of
\nthe policy in the 1970s and 1980s. However, their eloquent point
\nof view served to reject the allegations as groundless.<\/p>\n
Former mining officials have admitted it is true the contract-
\nof-work (COW) concept in the general mining sector needs review
\nfrom time to time, taking into account the prevailing changes,
\nincluding the international competition for foreign capital and
\ntechnology. In fact, as far as minerals -- except for oil and
\nnatural gas -- are concerned, the COW concept has so far been
\nchanged five times.<\/p>\n
The concept for the sixth generation COW is now being
\nfinalized and it is this concept which will be applied to the
\ncontract for the Busang gold mine. The basic concept stipulates,
\namong other things, the amount or rate of permanent fees,
\nroyalties, income tax, property tax, value added tax, import
\nduty, stamp duty, local taxes and fees and gradual relinquishment
\nof the concession areas. It also includes additional requirements
\ndesigned to suit the specific characteristics of the minerals to
\nbe developed.<\/p>\n
Officials, politicians and both domestic and foreign
\nbusinessmen have praised the basic COW concept as the most
\ntransparent deal between the government and private investors.
\nEvery COW agreement has to be consulted through open debates with
\nthe House of Representatives before it is approved by the
\nPresident. Several other countries have followed the Indonesian
\nproduction sharing contract concept in the hydrocarbon sector as
\na model.<\/p>\n
The government would likely address the wrong issues and not
\nsatisfactorily answer the critics if its information campaign
\nfocused on the general mining policy. We are familiar with
\nwandering criticisms by detractors who want to avoid head-on
\nconfrontation with a powerful target. We believe the criticisms
\nwere triggered not by what might be perceived as the shortcomings
\nof the mining policy itself, but mainly by the sudden,
\nunprecedented entry of what the public sees as politically well-
\nconnected businessmen into the gold mining industry. This is the
\nreal issue which the Minister of Mines and Energy Sudjana will
\nhave to explain.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/addressing-mining-critics-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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