Central government 'must control foreign mining investment'

Central government 'must control foreign mining investment'

JAKARTA (JP): The Ministry of Energy and Mineral Resources
said it was considering delaying the implementation of regional
autonomy on foreign mining investment by five years.

The ministry's director general for general mining, Surna
Tjahja Djadjadiningrat, said he had proposed a transition period
of five years because of concern that regions were still
unprepared to handle foreign mining investments.

"We're bit concerned when it comes to foreign investments once
autonomy is implemented," Surna told The Jakarta Post over the
weekend.

As stipulated in Law No. 22/1999 on regional autonomy,
provinces, regencies and mayoralties will be given greater
autonomy to manage their own affairs.

Regional autonomy will be enacted on Jan. 1, 2001, allowing
local administrations, among other things, to award contracts of
work to both local and foreign mining companies.

However, Surna questioned the regions' readiness to carry out
this job, especially negotiating mining contracts with large
multinational companies. He said most local administrations
lacked skilled personnel to assume such tasks.

According to him, it would be best if the central government
retained its right to sign foreign mining contracts until local
administrations were capable to take over the task.

"It's just a proposal, and it's subject to the approval of the
Ministry of Home Affairs and Regional Autonomy," Surna said,
adding that his proposal had also yet to receive the green light
from energy and mineral resources minister Purnomo Yusgiantoro.

Surna said earlier foreign investors were concerned that
mining contracts signed by a governor or a mayor would lack legal
strength.

He said that mining companies feared such contracts would
discourage banks from funding their investments.

At present, foreign mining contracts are signed by the
president and approved by the House of Representatives.

The executive director of the Indonesian Mining Association,
Paul Louis Coutrier, said foreign investors would welcome a delay
in the implementation of autonomy.

"Sudden changes are upsetting," he told the Post.

Coutrier went on to say that at present foreign investors were
concerned over the central government's commitment to their
mining contracts.

"It is only naturally that the central government wants to
delay the implementation," he continued.

According to him, Purnomo said earlier that a step-by-step
approach was preferable in transferring the contract rights of
large foreign investors to local administrations.

Coutrier said the central government had the experts to draft
and negotiate contracts with foreign investors.

He suggested the central government form teams of these
experts to guide local administrations during negotiations with
foreign investors.

Surna said his office would issue next month the procedures to
guide local administrations through the implementation of
autonomy.

The guidelines are part of Government Regulation No. 25/2000
on the authority of the central government and provinces as
autonomous regions.

He said that under the regulation, local administrations could
choose which of their rights as autonomous regions they were
prepared to take over by Jan. 1.

"It's actually a bottom-up process, where the local
administration decides its own readiness," he said.

Observers have said that with the implementation of full
autonomy in the mining industry, the presence of a directorate
general for general mining would become obsolete. (bkm)