Government vows to honor international business contracts

JAKARTA (JP): President Abdurrahman Wahid reasserted on Monday that the government remained committed to honoring its international business deals, but said contracts acquired through corruption in the past would have to be reviewed.

"Whatever comes out of the regional autonomy plan, we should not break our international commitments, but we ask the companies to renegotiate their contracts because (some) contracts were acquired in the past through corruption, cronyism and nepotism," Abdurrahman told a media conference after presiding over the first of regular Monday meetings of his economics team at Bina Graha presidential office.

The meeting was attended by, among others, Vice President Megawati Soekarnoputri, Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie, Minister of Forestry and Plantations Nur Mahmudi Ismail, Minister of Communications Agum Gumelar and head of the State Logistics Agency Rizal Ramli.

The President was responding to a question about the months- long tax dispute pitting gold mining company PT Newmont Minahasa Raya against a local government in North Sulawesi.

"We have to be steadfast to this principle (of honoring international contracts), otherwise we will not be respected and nobody would want to invest here," Gus Dur, as the President is also called, said.

In the wake of a demand for a review of the mining concession awarded to PT Freeport Indonesia several months ago, Abdurrahman confirmed that Indonesia would respect all international contracts it had endorsed.

Foreign investors have raised concerns about the country's volatile security climate and the uncertainty over the implementation of the new law on regional autonomy which is expected to take effect starting from Jan. 1, 2001.

"That's why Pak Sofyan Wanandi says that real foreign investment will only start to take place early next year," Gus Dur said, referring to the chairman of the Indonesian Business Council.

Earlier, Kwik expressed optimism that the International Monetary Fund (IMF) would release the next US$400 million tranche to Indonesia at the beginning of June.

"Ideally, if the IMF executive board meets on May 30, the fund will be disbursed June 1 or June 2," Kwik announced before the meeting.

The government and the IMF have agreed in principle on a new letter of intent, which states the government's future economic policies. The letter has yet to be signed.

The letter is expected to pave the way for the disbursement of the next loan to the country.

The IMF was originally scheduled to release the loan in early April. Disbursement has been put on hold, however, due to the government's failure to implement key economic reform measures on time.

Kwik said that he would "pay a courtesy call" on IMF headquarters later this month. (byg/prb)