Misplaced criticisms<\/p>\n
We share the great concern of mining consultants and analysts
\nover what they call misplaced and groundless criticism of foreign
\ncontractors' participation in Indonesia's mining industry. The
\ncriticism should have been leveled against the manner in which
\nseveral politically well connected businesspeople -- without any
\nmining track record to speak of -- tried to bulldoze their way
\ninto mining contracts, such as the Busang concession in East
\nKalimantan which holds one of the world's largest gold deposits.<\/p>\n
It is no wonder then that many analysts have questioned the
\nreal motive of the criticism launched by, among others, Amien
\nRais, Chairman of the Islamic Muhammadiyah organization. He laid
\ninto PT Freeport Indonesia, which has been mining copper and gold
\nin Irian Jaya since the early 1970s. Such sweeping comments might
\nincite people, who do not understand the deeper aspects of the
\nissue, into committing irresponsible acts.<\/p>\n
Nobody denies that foreign involvement in mining ventures is a
\nsensitive matter which requires careful handling because of the
\nnatural wealth at stake and the vast area of land required.
\nMoreover, mining operations usually take place in remote areas
\nwhere most of the local people are poorly educated and rarely
\nfamiliar with foreign practices. It is easy to see how mishandled
\ndeals could result in allegations of selling the national wealth
\nto foreigners.<\/p>\n
But the government, we reckon, has, from the outset, fully
\nappreciated these sensitivities and has accordingly prepared
\nsuitable safeguards to ensure that mineral extractions are
\nconducted in the most beneficial manner for the country. This
\nprinciple has been embodied in the Production Sharing Contract
\nconcept in the oil and gas industries and the Contract of Work
\nscheme in other mineral industries. Obviously, the terms of the
\ntwo types of contract have been amended from time to time, not
\nonly to secure bigger benefits but also to maintain foreign
\ninvestor interest in our national resources.<\/p>\n
The crux of the matter is that Indonesia is short of the
\ncapital, skills and technology necessary, in what are very risky
\nventures anyway, to tap its mineral resources. Neither does
\nIndonesia command a global mineral monopoly. It should instead
\ncompete with other countries to attract foreign capital and
\ntechnology. The results have so far been impressive. The profits
\nfrom oil and natural gas, industries which have been developed
\nmainly by foreign firms, and other minerals have been plowed back
\ninto the development of the economy.<\/p>\n
Moreover, the process of negotiating mining contracts is among
\nthe most transparent of all the deals between the government and
\nprivate investors. Applications for mining contracts not only
\nhave to pass several layers of bureaucratic examination, but also
\nhave to be approved by the House of Representatives. The process
\nis quite different, for example, from the awarding of forest
\nconcessions. This is vulnerable to collusion and political
\nlobbying because the licensing is not subject to stringent public
\nscrutiny.<\/p>\n
Having said all that, we don't mean to imply that the issue of
\nforeign mining contracts is problem free. Nor are all foreign
\nmining contractors lily-white investors. They do face problems,
\nwhich at times are numerous. They also sometimes cause problems,
\nnotably related to the environment. But the problems are caused
\nnot by the contractual concepts themselves but mostly by
\ninadequate supervision or lack of competence on the part of
\nofficials in charge of enforcing the contracts. Contractors also
\nsometimes face difficulties created by officials with vested
\ninterests and irrelevant interventions by the politically well
\nconnected. The latest irrelevant interventions were those which
\nset off a dispute between Bre-X Minerals and Barrick Gold Corp,
\nboth of Canada.<\/p>\n
We support the suggestions that the terms of mining contracts
\nneed periodical review to secure the national interests amid
\nchanges in the industry and keener competition between qualified,
\nbona fide foreign contractors. But simply demanding that existing
\ncontracts be stopped or reviewed altogether is entirely
\nillogical, groundless and against the national interest of
\ndeveloping natural resources for the greatest welfare of the
\npeople.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/misplaced-criticisms-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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