House questions operation of US-based Freeport
JAKARTA (JP): Members of Commission X of the House of Representative (DPR) yesterday asked Irian Jaya's Governor J. Pattipi if PT Freeport Indonesia's operations in the province have benefited the local people.
The House members contended in a hearing that the profits gained by the United States company from the copper and gold it has mined in Irian Jaya may have been much more than the benefits the local people have received from the company's presence.
"When we visited the Freeport mining complex, we got the impression that the company treated the area as part of the United States," said Mike Prionggo, a member of the commission.
PT Freeport Indonesia is a U.S.-Indonesian joint venture, 80 percent owned by Freeport McMoRan Copper & Gold of the United States, 10 percent by the government of Indonesia and another 10 percent by a local private company.
Governor Pattipi told the commission that Freeport has contributed greatly to Irian Jaya's economic and social development.
"In 1991 PT Freeport Indonesia contributed 47 percent to Irian Jaya's regional gross domestic product, up from 45 percent in 1990. This will further increase in the future due to the expansion of its production capacity up to 115,000 tons per day in 1996," Pittipi said.
He also assured the commission that although PT Freeport is the biggest contributor to the province's economy, it will not turn itself into an independent government and neither will its in mining area become a U.S. territory.
"The company also contributes Rp 500 million (US$231,588) every month to the local economy through its purchases of local goods," Pittipi added.
Unfair
The House members argued that the deal between the government and Freeport was unfair, thereby enabling the U.S. company to have too many advantages.
The chief of the Irian Jaya office of the Ministry of Mines and Energy Yudo D. Elyfas reminded the House commission that Freeport works in the province under a work contract with the government which was approved by the House.
"I must remind you that the deal is based on the contract which was approved by the House before it was ratified by the President," Yudo said.
He explained that the central government increased the shares for Irian from 70 percent to 80 percent out of royalties given by Freeport.
The company started its copper and gold mining operation in Irian Jaya in 1967.
The company's mining concession was extended last year in light of its expansion program that includes the construction of a copper smelter in Gresik, East Java.(yns)