Experts criticize mining policy changes<\/p>\n
JAKARTA (JP): The government's proposed changes to mining
\npolicy, one of which would require foreign contractors to give a
\n10 percent share of their mining ventures to the government, drew
\ncriticism from several former mining officials and analysts
\nyesterday.<\/p>\n
\"The government should increase revenue from mining contracts
\nthrough royalties rather than equity participation,\" former
\nminister of mines and energy Subroto told House Commission VI for
\nmining and industry.<\/p>\n
Subroto, former ministry of mines and energy secretary-general
\nSoetaryo Sigit and former mining official Ridwan Mahmud, briefed
\nHouse members on their views about the government's proposed
\nchanges to seventh generation mining contracts of work (COW).<\/p>\n
Subroto said equity participation also required a capital
\ninjection which bore risks because it would not automatically
\ngenerate dividends.<\/p>\n
\"Moreover, the proposal which obliges foreign mining
\ncontractors to give a 10 percent share to the government (before
\nthey start production) goes against the 1994 law which allows
\nwholly-owned foreign investments in the mining sector,\" Subroto
\nsaid.<\/p>\n
The former officials who now work mostly as analysts or
\nconsultants called on the government to adhere to existing laws
\nto protect Indonesia's hard earned credibility with mining
\ninvestors.<\/p>\n
Otherwise, Indonesia might lose to tighter competition from
\nother developing countries in attracting foreign investment to
\ntheir mining sectors, they said.<\/p>\n
\"We already have a good reputation among foreign mining
\ncompanies as a country which adheres to the rules. Many countries
\nhave even imitated our mining policy,\" he said.<\/p>\n
Director General of Mines Adjat Sudrajat said last Friday that
\nthe government had proposed several changes to the seventh
\ngeneration COWs which had been initialed last year by mining
\nofficials and contractors.<\/p>\n
Foreign companies have reportedly rejected any changes to
\ntheir draft COWs because they were negotiated with and approved
\nby former director general of mining, Kuntoro Mangkusubroto.<\/p>\n
Kuntoro was replaced by Adjat Sudrajat in April.<\/p>\n
Foreign investors expected only minor changes would be made to
\ntheir draft contracts when they were taken to the House of
\nRepresentatives and the Investment Coordinating Board for
\ndiscussion.<\/p>\n
Commission VI deputy head Lili Asdjudiredja said 194 COWs --
\nincluding 15 coal COWs and 176 mineral COWs -- would be discussed
\nwith the House soon.<\/p>\n
Subroto said that under existing law, foreign mining companies
\nhad to offer up to 51 percent of their shares to Indonesian
\ninterests after ten years of operation.<\/p>\n
\"The government or the public have to buy the shares. If they
\ndon't have any money, the shares will remain in the hands of the
\nforeign contractors,\" he said.<\/p>\n
\"We cannot get the shares for free because the mining ventures
\nare not owned by our grandfathers,\" Subroto said.<\/p>\n
Soetaryo agreed that it was better for the government to raise
\nroyalties or taxes on minerals to increase its income from the
\nmining sector, rather than obliging foreign miners to give it
\nshares.<\/p>\n
Ridwan said Indonesia also had no right to ask for a portion
\nof capital gains earned by foreigners from buying and selling
\nshares in their own countries.<\/p>\n
\"Do you think Indonesia has the right to tax foreigners in
\ntheir own countries?\" Ridwan said about the government's request
\nfor a share in the capital gains made by foreign contractors from
\nany share issuance overseas.<\/p>\n
Other changes proposed by the government to seventh generation
\nCOWs require foreign contractors to offer shares to local
\ncooperatives or companies owned by local administrations, to
\nobtain government consent for the release of any mining data to
\nthe public and to have their reserves assessed by independent
\nconsultants. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/experts-criticize-mining-policy-changes-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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