Investors urged to seek military help

JAKARTA (JP): Minister of Defense Juwono Sudarsono encouraged mining investors on Tuesday to cooperate with the military and the police in ensuring the safety of their businesses amid widespread security instability in the country.

Juwono said that the cooperation between security forces and investors was necessary because the government could not work alone to deal with the growing security problem in the country, due to the lack of funds.

"At present, I cannot guarantee the safety of investors," he told reporters in a press meeting following his presentation at the Jakarta International Energy Conference 2000.

Juwono said that such cooperation might take different forms, depending on the various security situations and conditions. He cited the example of giant gold mining company PT Freeport Indonesia, which was cooperating with the army in transporting security personnel in areas surrounding its mining site in Irian Jaya.

However, he warned that the use of security personnel against civilians should be kept at minimum and should be avoided when possible.

Disputes between mining companies and local residents and workers are escalating. The mining firms have often been forced to close their operations due the lack of security guarantees from the local government.

Juwono said he understood the need to provide an immediate solution to handle the security problem. But he said that it would take years to regain stability in Indonesia which has been racked for the past two years by political turmoil and communal bloodshed.

At present, he said, the country's police force was lacking in modern equipment and personnel to adequately protect companies' plants.

According to him, it would take about 10 to 15 years to bring the ratio of police personnel to civilians to the ideal level of one police officer to every 400 civilians as commonly adopted by developed nations.

On the other hand, he said, the government must also improve the welfare of the Army and the police.

He said that current members of the Army or the police force were prone to join illegal activities, which sometimes offered higher earnings than their salaries.

Juwono was commenting on reports of army officers who backed illegal coal mining activities, thereby becoming part of the security problem foreign investors are facing in East and South Kalimantan.

Since the downfall of former president Soeharto in May 1998, law enforcement has deteriorated, causing many mining companies to face security problems with locals or company workers.

Locals often feel that the presence of foreign mining companies, exploiting their natural resources, are of little benefit to them.

They increasingly resort to extreme measures such as blocking roads to the companies' mining sites.

The latest example being PT Kaltim Prima Coal (KPC), which stopped operating after about 60 striking workers occupied important mining facilities.

The company has faced losses of about US$1.4 million a day since the closure of its operations on June 15, and has declared force majeure to its coal customers.

Faced with this trend, President Abdurrahman Wahid earlier ordered the military to protect mining operations.

"I have ordered the mines and energy minister to provide mining investors with protection," he said in his opening speech at the conference on Monday evening.

He said that security was a vital factor for continued investment in this country.

But Minister of Mines and Energy Susilo Bambang Yudhoyono gave a cautious note, saying that investors should prioritize negotiations and not rely on the military.

"Negotiations would prevent locals or workers from forcing a mining company to shut down its operation," Bambang told reporters on the sidelines of the conference.

He said that the use of force should be the last option, and only aimed at upholding law enforcement.

Bambang said earlier in a speech to the conference that the mining and energy sector last year accounted for around 14 percent of Indonesia's gross domestic product and generated about $10.5 billion or 20 percent of total export earnings.

"In the last fiscal year (1999/2000), tax revenues from the mine and energy sector accounted for almost 27 percent of total government receipts," he added.

Bambang said the contribution of the mining and energy sector to the state budget could be even higher in the current fiscal year in view of the higher international oil prices. (bkm)