Lawsuit against KPC hurting RI image: PwC
Lawsuit against KPC hurting RI image: PwC
Moch. N. Kurniawan, The Jakarta Post, Jakarta
The recent lawsuit brought by the East Kalimantan government
against coal mining firm PT Kaltim Prima Coal over delays in the
firm's divestment program had further hurt the country's poor
image among mining investors, an analyst from international
accounting firm PricewaterhouseCooper said on Wednesday.
Firdaus Asikin said the suit had made foreign investors doubt
the country's bona fides in respecting Contracts of Work.
"It's a negative sign. The parties shouldn't be bringing the
case here, but rather should be bringing it to international
arbitration as stated in the CoW," he told The Jakarta Post while
unveiling the company's latest report on Indonesian mining.
He said the lawsuit was also forcing existing investors to
further defer their investment plans.
The East Kalimantan administration has sued KPC in the South
Jakarta District Court for intentionally delaying the divestment
of 51 percent of its shares. The divestment is part of KPC's
obligations under the CoW.
Firdaus said that should the East Kalimantan administration
win the suit, it would discourage potential foreign investors
from putting their money in the country.
The PwC report, which focuses on the performance of Indonesian
mining last year, said Indonesia's mining sector continued to
make a valuable contribution to the country's economic and social
advancement last year despite falling profitability.
The report is based on a survey of 19 producing companies and
15 exploration companies.
Firdaus pointed out that the continued strength of the
industry was of paramount importance to all Indonesian as 98
percent of the sector's employees were Indonesian nationals.
The industry was also an important customer for Indonesian
suppliers, he said, citing that Indonesian suppliers accounted
for 27 percent of industry spending of more that $1.5 billion on
goods and services.
The report said that the industry's overall net profit
decreased by 33 percent to US$368 million in 2000, despite a 25
percent increase in net revenue.
Total government revenue from the industry in 2000 dropped 2
percent to Rp 6.8 billion (US$801.8) from the previous year's
figure, the report said.
Last year's total tax take from mining companies, including
royalties and indirect taxes, stood at $572.1 million, it said.