People want fair share of natural resources

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.