Investors urged to be 'flexible' over contracts
Investors urged to be 'flexible' over contracts
JAKARTA (JP): Minister of Mines and Energy Susilo Bambang
Yudhoyono said the government would honor all mining contracts
awarded by previous governments, but called on foreign investors
to be "flexible".
"(There is) no idea at all on the government's side to alter
the contracts ... but if we face problems on the ground, we ask
and encourage everybody to sit down, talk and negotiate to find a
solution without changing the contract," Bambang said on
Wednesday evening during a dinner with foreign investors in the
mining sector.
"If the contractors say this is my contract, this is my book,
OK. (But) a black-and-white approach is not conducive to
(reaching) a proper solution," he said.
The event was organized by the Indonesia-Australia Business
Council (IABC) and moderated by IABC president Sabam Siagian.
Bambang's statement comes amid a growing number of disputes in
the mining and power sectors between investors, state companies,
provincial administrations and the public.
In the power sector, state electricity company PLN is seeking
to renegotiate the terms of the power purchase contracts signed
by its former management, claiming the contracts were the result
of collusion, corruption and nepotism during the reign of former
president Soeharto.
In the mining sector, several mining companies in Kalimantan
have been the target of protests by locals demanding compensation
for land and property the companies appropriated during the
Soeharto regime.
The villagers claim the companies, backed by security
personnel, used force to expel them from their land without
paying them full compensation.
In North Sulawesi, Minahasa regency sued gold mining company
PT Newmont Minahasa Raya for refusing to pay C-class taxes to the
regency administration.
These taxes are imposed for the excavation of building
materials and industrial minerals, including sands, stone and
kaolin.
Newmont has reportedly refused to pay these taxes, saying
there is no clause in its contract of work requiring it to pay C-
class taxes.
During Soeharto's rule, the central government failed to
consult with local residents and provincial administrations when
negotiating mining contracts of work.
Bambang said the new government would encourage conflicting
parties to negotiate and reach win-win solutions without changing
the contracts of work or going to the courts.
Intelligence
During the dinner, Bambang, who spoke in English, outlined the
policies his ministry planned to pursue in the oil, mining and
power sectors.
In the mining sector, he said his ministry would focus on
measures to put an end to illegal mining, which has flourished
during the economic crisis to the detriment of many mining
contractors.
He said his ministry would take measures to legalize small-
scale mining by so-called "illegal miners" by allocating land to
them and issuing them licenses.
The government will train them in proper mining practices and
supervise their activities, he said. "But we shall enforce the
law if they are in the wrong."
Bambang said provincial administrations often failed to crack
down on illegal mining because the miners were backed by people
in positions of power, including members of the military and
police.
He said his ministry would send intelligence officers into the
field to find out who was backing the illegal miners, adding that
appropriate action would be taken against those found guilty of
such activities.
Bambang was Indonesian Military chief of staff for territorial
affairs before being appointed minister of mines and energy last
month.
Bambang said his ministry also would take measures to ensure
all mining contractors employed correct mining procedures,
supported community development programs and protected the
environment.
He said all mining contractors currently had some type of
community development programs, but the government would seek to
improve the programs by outlining for the contractors the types
of programs they would be required to implement and the amount of
money they would obligated to budget for these programs. (jsk)