House ready to debate new mining bill

Mochammad N. Kurniawan, The Jakarta Post, Jakarta

The House of Representatives is ready to commence its deliberations on the government-proposed new mining bill, which will provide legal certainty to mining investors, according to a senior legislator.

Julius Bobo of the Indonesian Democratic Party of Struggle (PDI Perjuangan) said over the weekend that the debate was expected to start next month, and legislators should be able to pass it into law at the end of January or February 2002.

"We really need a new mining law. It will give certainty to the people, central and local government, and investors," he said.

He explained that existing mining Law No. 11/1967, which gave the central government full authority over the country's mining sector, contradicted the new regional autonomy law, which stipulated that regional governments had authority in issuing mining licenses to investors.

Julius said that this had created legal uncertainty, which had prompted some mining investors to suspend new investment.

Reports said earlier that many mining companies had suspended their exploration activities this year due to a combination of legal and security uncertainties.

American mining firm PT Newmont Pacific Nusantara is one example that has shelved or halted its exploration activity because of the legal mess.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government could do little to prevent the suspension of mining investment here until the new mining law had come out.

Central government submitted the new mining bill to the House in August, its third bill initiative this year, in addition to the oil and gas bill, and the power bill.

But looking at the lengthy debate and delays in the deliberation of the new oil and gas bill, which is expected to be passed into law soon, the government may also face tough times in dealing with legislators over the new mining bill.

Under the new bill, local and foreign mining investors would be treated equally.

Based on the existing mining law, the so-termed foreign investors' contract of work (COW) needs the approval of the House while that of local investors, simply termed a mining contract, does not need it.

The new bill also stipulates that future mining contracts would have to be discussed first with the House before being issued by local authorities.

There is also a plan to drop the "lex specialist" concept, under which the existing law is attached to the COW, as it is deemed to be less advantageous to the state, particularly in terms of tax revenue.

Based on the lex specialist concept, for instance, foreign investors holding a COW are exempt from subsequent changes in tax regulations.

The new mining bill will also maintain the rights of local traditional miners to exploit mining resources in a particular region.