Govt urges House to accept mining proposal

Fitri Wulandari, The Jakarta Post, Jakarta

The government called on the House of Representatives to immediately allow 13 mining companies to resume activities in protected forests because investment in the mining sector is running thin.

Coordinating Minister for the Economy Dorodjatun Kuntjoro- Jakti said the existing investment plans in the mining sector were projected to last until 2007.

"After 2007, there will be no new (investment) activities. Please allow these 13 companies to go in," Dorodjatun said in a media briefing after opening a conference of Indonesian geology experts on Tuesday.

The 13 mining companies are among 22 companies who have appealed for the resumption of their operations in protected forests after the implementation of forestry law No. 41/1999, which bans open-pit mining activities in protected forests.

These companies received contracts years before the law was enacted and their working areas were not classified as protected forests at the time. But their appeal was rejected by the House last month.

A government document shows that the 13 mining firms could contribute around US$379.81 million worth of tax and non-tax revenue each year. These mines would absorb 47,269 local workers, with eight of the 13 companies employing a workforce 90 percent comprised of local workers. Their total investment in the country up to 2002 had reached $7.6 billion.

The forestry law, however, is lauded by environmental activists. They say mining activities are responsible for damage to Indonesia's forest resources.

While acknowledging concerns over environmental degradation, Dorodjatun said mining areas would only take up 2 percent of total protected forest areas, which currently stand at 11.4 million hectares.

Dorodjatun said new mining activities should start within 10 to 20 years to take advantage of the rising price of mining commodities spurred by high demand from China's rapid manufacturing industry.

"If we start new mining investment after 20 years, it will be too late because by then China may be slowing down and has less demand," he claimed.

The mining sector has been in the doldrums for years due to uncertainty in government mining policy, high taxes, lack of security guarantees, corruption and inconsistencies related to regional autonomy. These have discouraged existing mining companies and potential investors.

The country is slipping off the stage of the world's mining industry in terms of attractiveness for investment. The Indonesian Mining Association (IMA) said Indonesia was ranked 27 out of 35 countries surveyed between 2001 to 2002.