'Govt must take higher stake in Busang mine'

JAKARTA (JP): Analysts reaffirmed yesterday their suggestion that the government take a much bigger stake in the Busang gold mine and allow Indonesian companies to play a key role in mining.

Analyst Rizal Ramli, a director of Econit research institute, said it was encouraging that the government would have a 10 percent stake plus an option to raise its share in future.

"But the 10 percent stake is not enough. The government can raise its stake in Busang because it has a strong bargaining position," he told a discussion organized by Prisma magazine.

Rizal Ramli was one of three speakers at the discussion on economic and legal aspects of exploiting non-oil minerals. The other speakers were Amien Rais, the chairman of the Islamic organization Muhammadiyah, and Kwik Kian Gie, a noted economist.

Frans Seda, an economist and former finance minister, was scheduled to speak but he failed to attend.

Amien Rais stressed the importance of complying with article 33 of the Indonesian constitution. The article stipulates that earth, water and all other natural resources shall be used for the greatest welfare of the people.

"The Indonesian people are the owners of the mining deposits. But ironically, the foreign mining contractors have been the biggest beneficiaries," he said, adding that the government should not repeat the mistake that it made over the Freeport mine in Irian Jaya.

Rizal and Amien have voiced similar views several times in the last few weeks. But at the meeting yesterday, Kwik Kian Gie gave a stronger-worded presentation.

Kwik said it was wrong to say that Indonesia badly needed foreign investors to develop its mines.

"We have the capacity to explore and exploit the mining deposits. We should act as free people in our own country. We don't have to rely mainly on foreign investors," he told the applauding participants, including members of the House of Representatives, government officials, scientists, economists and journalists.

Kwik said that Indonesia could own 100 percent of every mining project in the country. He said the government should let local private and state-owned companies play a key role in developing the mining sector.

"We can use mining deposits to secure loans from foreign banks to develop them. If we don't have the technology, we can hire foreign experts," he said.

He urged the government not to focus too much attention on the development of natural resources.

"We have human resources that, if developed well, could become the key factor in developing the country," he said.

"Look at Singapore. What did it have some 50 years ago? Now it has become the most developed nation in this region because of its quality human resources," he said.

The three speakers each had their own solutions.

Rizal urged the government to arrange an open tender for the development of the Busang gold mine after paying some compensation to previous investors.

The final contract of work -- which allows foreign contractors to exploit mining deposits -- should be awarded to investors which offered the most benefits to the country, he said.

Amien Rais said the government should review its regulations on mineral exploration and exploitation to stop the country losing further.

"The government should always base its mining policy on article 33 of the constitution. Any policy against this stipulation should be corrected," he said.

Kwik said it was not enough to improve the regulations. The most important thing is "how the government will eliminate the corrupt mentality among civil servants," he said.

He pointed out that it was useless to have a good legal framework if it was handled by corrupt bureaucrats. "The current contract of work for mining is the result of manipulation by certain civil servants," he said.

Participants received the analysts' views with mixed reactions.

S.G.B. Tampubolon, a member of the House budgetary commission, shared the analysts' views but said the problem hinged on the government's will to fix it.

"The government has told us to wait for some time. I don't know when it will realize it," he said.

Umar Juoro, an economist at the CIDES research institute, said he agreed with the idea of raising _ndonesian shares in mining projects, including Busang, but the government should make sure that the shares were not owned by the same business groups or people.

Richard, a former senior official at the Ministry of Mines and Energy, said that all mining regulations were formulated to attract investment to the mining sector. (bnt)