People want fair share of natural resources

The furor over East Kalimantan's Busang gold deposits continues, with some calling for the project to be abandoned until a capable state company can be brought in. Scholar Ramlan Surbakti looks at the issue from a constitutional perspective.

SURABAYA (JP): The current debate about the government's mining policy broke out after two Canadian companies, Bre-X and Barrick, began fighting for gold exploitation rights in an area of East Kalimantan called Busang.

The gold deposits found there are believed to be huge but the government is only to get a 10 percent share. Critics say the policy is unjust and against the 1945 Constitution, which stipulates that the exploitation of natural resources must first benefit the people.

Economist Kwik Kian Gie and scholar Amien Rais have proposed that the mine be managed by the government for the sake of the people. But would the people's welfare be in better hands if the mines were entrusted to state-owned companies? Or would they be better managed by national or foreign private companies?

Many studies and surveys are required before a gold mine can be exploited. Also needed are high technology, modern facilities and infrastructure -- and a great deal of capital. Furthermore, there is no guarantee that this endeavor will immediately strike large deposits.

After the discovery of a gold deposit come exploitation, safeguarding and marketing activities, all of which require an investment that few companies can afford. The endeavor is not only an investment that will not yield profits for years, but also a project with a high risk of failure. Do the state companies have the facilities, infrastructure and know-how required?

Gold mines affect a vast track of land and disrupt the environment. A large number of people will inevitably have to relinquish their lands, which are the source of their livelihood. By virtue of Article 33 in the Constitution, the state must manage mining exploitation activities for the people's maximum welfare. According to Indonesia's first vice president, Mohammad Hatta, who formulated Article 33, the term "the state has control of" natural resources does not mean that the state owns them. It is, however, expected to regulate and guide the use of them for the greatest benefit of the people.

Regulation by the state also does not mean that a mining site must be worked on by a state company, although this would be preferable so that the government and the House of Representatives could have more control and make sure that the maximum welfare of the people is being met.

If no state-owned company meets the requirements, the state can only serve as a regulator. Article 33 should then be interpreted as: "A market mechanism wherever possible, state intervention wherever necessary, and NGO involvement if the local community needs it."

We should allow foreign or national private companies to exploit natural resources according to fair competition practices and do away with the need for licenses based on relationships with powerful officials. This would help maximize operations and profits.

The government and the House would outline the contract of work requirements and conditions, such as the percentage of share ownership, the percentage of production sharing between the private company and the state, the percentage of the company's annual profit given to the local community, taxes, the time needed for technology transfer, the development of local human resources, the composition and welfare of foreign and domestic workers, and environmental protection.

If the local community is not capable of fighting for its legal rights and land interests vis a vis the government or the company exploiting the natural resources, non-governmental organizations could be called in. Monitoring would be a joint effort by the government, the House, NGOs and the media.

What most concerns people is that a private company will be given the right to explore and manage the mines based on collusion. Weak supervision could deprive the people of receiving the maximum benefits from our natural resources, and state intervention might not be what the Constitution had envisaged.

The writer is a political science lecturer at Airlangga University, Surabaya.