Government will not amend Freeport contract: Alwi<\/p>\n
JAKARTA (JP): Minister of Foreign Affairs Alwi Shihab said on
\nSaturday the government had rejected calls for the amendment of
\nthe contract of giant copper and gold mining company PT Freeport
\nIndonesia, reiterating the government's pledge to honor its deals
\nwith foreign investors.<\/p>\n
Alwi said forcing Freeport to change its contract would
\nundermine the country's legal certainty and discourage foreign
\ninvestors from entering Indonesia.<\/p>\n
He made the remarks amid growing criticism over Freeport's
\noperation and mounting pressure on the government from various
\nparties, including ministers, to amend Freeport's contract.<\/p>\n
Outgoing Irian Jaya Governor Rear Adm. Freddy Numberi, who is
\nalso state minister of state administrative reforms, demanded
\nlast week Freeport's contract be amended, asking the company to
\ndonate a 20 percent stake to the people of Irian Jaya.<\/p>\n
Alwi, however, said the government would not amend the
\ncontract but it would ask Freeport to give a concession to the
\nlocal people, including a stake in the company.<\/p>\n
\"But, that doesn't mean changing the contract,\" he said.<\/p>\n
Alwi stressed the concession should aim at improving the
\nwelfare of the local people, by, among others things, providing
\nthem with more job opportunities.<\/p>\n
PT Freeport Indonesia is 81.28 percent owned by United States
\nmining company Freeport McMoRan Copper & Gold. The Indonesian
\ngovernment holds a 9.36 percent stake in the company, as does the
\nPT Indocopper Investama Corporation.<\/p>\n
Indocopper is 49 percent owned by Freeport McMoran and 50.48
\npercent by Nusamba Mineral Industries, a company linked to former
\npresident Soeharto, while the investing public holds a 0.52
\npercent stake.<\/p>\n
Executive director of the Indonesian Mining Association (IMA)
\nP.L. Coutrier said the request of the local people for a stake in
\nthe company was reasonable.<\/p>\n
\"I can understand the request. It was in the interest of
\nFreeport to relinquish some shares to the locals, as it would
\nmake the latter care more for Freeport,\" Coutrier told The
\nJakarta Post over the weekend.<\/p>\n
Legislator Pramono Anung of the House of Representatives'
\nCommission VIII for mines and energy said any discussion on the
\ndivestment of Freeport's shares should be held in the framework
\nof the contract.<\/p>\n
\"There is no need for the contract to be amended, since it
\nalready contains a clause regulating the company's divestment
\nobligation,\" Pramono said.<\/p>\n
Under the contract, which was signed in December 1991,
\nFreeport is obliged to divest up to 51 percent of its shares to
\nthe Indonesian government, Indonesian companies or Indonesian
\ncitizens within 20 years after the signing of the contract.<\/p>\n
However, Pramono said, thus far Freeport had failed to divest
\nits shares as stipulated in the contract.<\/p>\n
According to him, Freeport had taken advantage of a clause in
\nthe contract that allowed it to rid itself of the divestment
\nobligation should the government issue a regulation allowing it
\nto do so.<\/p>\n
In 1994, three years after the signing of Freeport's contract,
\nthe government issued regulation No. 20\/1994 allowing foreign
\ninvestors to fully own their companies, Pramono said.<\/p>\n
Pressure on the government to review Freeport's contract also
\ncame from State Minister of Environment Sonny Keraf.<\/p>\n
He blasted Freeport for failing to protect the environment
\naround its mining site.<\/p>\n
Freeport vice president Yuli Ismartono rejected allegations
\nthat the company had damaged the surrounding environment and did
\nnot care for the welfare of the local communities.<\/p>\n
She said meeting environmental standards was mandatory in
\nFreeport's contract and the company had been complying with the
\nIndonesian regulations on this matter.<\/p>\n
Independent consultant Montgomery-Watson, which was hired by
\nFreeport to conduct an environmental audit on the company last
\nyear, described Freeport's environmental protection program as
\nexemplary, but Sonny said the audit was incomplete.<\/p>\n
Yuli also said that during 1991 to 1999, Indonesia had earned
\nmore than US$1.27 billion in taxes, royalties and dividends from
\nFreeport.<\/p>\n
\"Some 87 percent of Freeport's earnings were spent in
\nIndonesia,\" Yuli said in statement last week.<\/p>\n
Yuli further said the company had been the object of five
\nindependent probes on human rights violations, but none had
\nproved any wrongdoings by the company.<\/p>\n
Former U.S. secretary of state Henry Kissinger visited the
\ncountry in the defense of Freeport last week.<\/p>\n
During a call on President Abdurrahman Wahid, Kissinger, who
\nis a member of Freeport McMoRan's board of directors, asked the
\nIndonesian government to honor its contract with Freeport,
\nwarning that any violation of the contract would impede the flow
\nof foreign investment. (dja\/bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-will-not-amend-freeport-contract-alwi-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}