Australian firms keep faith in Indonesia: Minister

JAKARTA (JP): Australian businesses, particularly in the mining and energy sector, are maintaining their presence in crisis-plagued Indonesia and showing a strong commitment to their ventures, a visiting Australian minister said on Monday.

Minister for Industry, Science and Resources Nick Minchin said the companies considered Indonesia's enormous business potential based on its huge population, immense natural resources and vibrant, energetic and friendly people.

"Major Australian companies have maintained their commitment to Indonesia despite the crisis and are to be congratulated for hanging in here in the face of economic difficulties," Minchin said at a business luncheon organized by the Indonesia-Australia Business Council.

Minchin said Australian investors maintained their strong presence in the mineral and energy sector because it was one of the few which managed to escape relatively unscathed from the crisis.

He said the rupiah's sharp depreciation against the U.S. dollar since mid-1997 enhanced the international competitiveness of Indonesian coal exports. It also helped boost profitability of Australian coal mining companies in Indonesia.

"Suppliers from other countries are finding it more difficult to compete in the Asian markets for steaming coal -- providing further market opportunities for Australian and Indonesian coal suppliers."

Major Australian mining companies operating in Indonesia include the country's largest coal miner PT Kaltim Prima Coal in East Kalimantan, equally owned by Anglo-Australian mining company British Petroleum and Rio Tinto, and tin miner PT Koba Tin in South Sumatra, a joint venture between Australia's Kajuara Mining Corp. Pty. Ltd. (75 percent) and publicly-listed state mining company PT Aneka Tambang (25 percent).

Other major Australian mining firms present in the country are Broken Hill Pty. Co. Ltd., Aurora Gold, Kalimantan Gold, Ocean Resources, Straits Resources and North Mining. Their explorations include gold, diamonds and other minerals.

Several Australian mining goods and service providers are also represented.

Minchin said Australian investment in mining remained strong last year despite the crisis, with 11 Australian companies awarded contracts of work (COW) early in 1998.

"(The Indonesian government's) continuing moves to privatize state-owned mining companies hold out opportunities for a further expansion of Australian businessmen in Indonesia."

He said Australian investors rated Indonesia as a country with excellent mineral prospects and the COW scheme applied by the government in the mining sector provided investment security.

Minchin noted Indonesia could do more to offer competitive taxation and resource access regimes to attract global investors.

"In the age of globalization, capital flows are very fast and free ... It is not enough for Indonesia to be highly prospective in minerals and energy products. Indonesia's taxation and resources access regimes must be as good as, and ideally better than, the many countries competing for the investment," Minchin said. (jsk)