KEM land dispute won't affect foreign investment: Rozy

KEM land dispute won't affect foreign investment: Rozy

By Reiner S

SANUR, Bali (JP): Newly appointed Minister of Investment and
State Enterprises Development Rozy Munir played down on Thursday
the impact of the high profile land dispute between giant gold
mining firm PT Kelian Equatorial Mining (KEM) and local people in
East Kalimantan.

"I don't think so. Don't worry," he told reporters in response
to questions that the KEM case would create fear among foreign
investors.

The minister said that the inflow of foreign investment into
the country showed an upward trend in the first three months
despite reports of conflicts between some mining companies and
local communities and local governments.

The value and the number of projects approved during the three
months were not huge but the important thing is that there's an
increasing trend, he added.

Rozy said that his office would continue to improve
communication efforts with the foreign investment community to
get first hand information about the problems faced by investors
in the country, and to explain what measures should be taken and
what has been implemented.

Rozy was speaking on the sidelines on an international forum
on the privatization program.

KEM, which is 90 percent owned by the giant Rio Tinto mining
group, has temporarily shut down its mining operation. Local
people have blockaded the road into the site and the company has
been unable to deliver basic supplies including fuel and food to
its 1,500 employees since April 18.

The local villagers have demanded compensation for the land
acquired by the company. KEM claims to have settled the dispute
two years ago, but they have received some 6,000 new claims from
local residents.

Rozy said that his office would gather the necessary
information from related ministries to help resolve the KEM
problem.

"We will gather complete information first. Our office is
interested in the problem from the investment aspect," he said.

Rozy added that he is scheduled to meet with the Minister of
Defense and Security Juwono Sudarsono today (Friday) together
with the foreign investment community in Jakarta to help resolve
the various problems encountered by foreign investors.

"We will respond to their concerns and complaints seriously,"
he said.

Rozy was appointed to the current position late last month,
replacing Laksamana Sukardi.

He said that the ministry had been engaged in regular meetings
with the foreign community and diplomats in a bid to help
maintain and encourage foreign investment in the country.

Foreign investment is seen as a crucial element to help the
country recover from the economic crisis that has gripped it for
two years.

Unfortunately, persistent social unrest and security problems
have plagued various parts of the country since the downfall of
former president Soeharto and handling these problems in the new
democratic environment has required patience and understanding by
all parties. The problems and the slow pace and uncertainty of
negotiations has created jitters to some investors.

The launch of the new autonomy law giving greater power to
regional administrations also has created some confusion and
fears among businesses.

Meanwhile Australian miner Rio Tinto said separately on
Thursday that it would restart operations at its 14-metric-ton-a-
year gold mine in East Kalimantan after local activists ended a
road block that had cut off essential supplies to the mine and
forced it to suspend operations on May 6.

Company spokesman Anang Noor said the protesters agreed
Wednesday to further negotiations over their land rights claim,
but he wasn't immediately able to provide details of any new
offer from the company.

"We have now started negotiating again," Anang told Dow Jones.

The dispute is the latest in a string of clashes between
foreign resource companies and local communities in Indonesia,
where local authorities in several resource-rich provinces are
trying to wrest a greater share of income from such companies.

The East Kalimantan mine is owned and operated by PT Kelian
Equatorial Mining, which is 90 percent-owned by Rio Tinto and
10%-owned by local partner PT Harita Jayaraya.

The protesters are demanding compensation from Rio Tinto and
the Indonesian government for land they allege was taken from
them in the late 1980s, the company said. They are seeking
compensation of Rp 100,000 per square meter of land.

Last week's suspension was the first time that Rio Tinto has
stopped production since it began operating the US$250 million
mine in 1992.