Mine laws stifle Indonesian push

Despite recent moves by the Indonesian Government to shore up foreign investment, some of the country’s more appealing assets – its mineral resources – remain problematic.

Indonesian ambassador to Australia Imron Cotan told a lunch in Perth last week that the Indonesian Government was keen to facilitate new foreign investment in Indonesia and had made two important decrees recently that would make establishing a business in Indonesia easier.

The Indonesian Government recently took sole control of a previously complicated and problematic foreign business licensing system and, just last week, a corruption court was established.

While these moves were acknowledged, audience members, including Clough Limited director Harold Clough, asked whether the new licensing system would assist the mining industry.

Mr Cotan said the new licencing system only referred to the licensing of a business rather than the governance of mining licences, which remained in the hands of provincial authorities.

Schenker Logistics power, oil and gas regional project manager Folker Kruger, who was recently transferred to Perth after nine years in Indonesia, said in the past three to five years there had been little direct foreign investment in the Indonesian mining industry because of problems with the provincial governments.

Seven years ago regional authorities were given more control and the uncertainty and irregularity this has bought is seen as a big part of the problem.

PricewaterhouseCoopers Indonesia partner Marc Upcroft said previously the Indonesian Government’s Contract of Work system brought absolute certainty to the mining industry.

However, he said a proposed new mining law looked as though it might break away from the previous system. 

Mr Upcroft said as a result Indonesia had gone off international miners’ priorities.

“When you compare now to a decade ago there is a stark contrast,” he said.

Mr Upcroft said the proposed new mining law had been in draft format for a number of years and could remain that way for some time.

Local base metals explorer Herald Resources, which is nearing completion of a $6 million feasibility study of the Dairi zinc/lead project in Indonesia, has reported having no problems in the province it operates in.

However, Herald managing director Terry Allen said he recognised some other provincial bureaucracies had been difficult since the devolution of power from Jakarta to the regions and provinces.

“This has mainly been caused by a lack of experienced people and supportive infrastructure at the regional level,” he said.