MINING
JAKARTA, KOMPAS — President Joko Widodo has signaled that he will take a firm stance regarding the status of PT Freeport Indonesia. Firm steps are taken if discussions regarding the rights and obligations of mining companies reach an impasse.
The attitude that the government will take is based on national interests.
"If it is difficult to consult and negotiate, then we will act," said the President in Jakarta, Thursday (23/2).
The President did not explain the attitude in question. The President made this statement in response to a question regarding the government's steps in dealing with Freeport Indonesia's attitude.
Previously, President and CEO of Freeport-McMoRan Inc Richard C Adkerson at a press conference in Jakarta, Monday (20/2), stated that it was difficult to accept the conditions proposed by the Indonesian Government. These conditions require Freeport to change its operational status from a work contract (KK) to a special mining business permit (IUPK) guided by the regulations in force in Indonesia.
Freeport objected to the rule of share divestment of at least 51 percent and the tax scheme that complies with applicable regulations.
However, the President emphasized that before taking a stance, the government still wants to find a win-win solution. Because the root of the problem with Freeport is a business problem.
Vice President Jusuf Kalla hopes that a resolution to the problem with Freeport can be obtained through negotiations. He hopes that negotiations between the government and Freeport Indonesia will resume. The negotiations actually started in 2015.
“Just the issue of divestment, taxes and extension. (But) the extension is clear," said Kalla.
Regarding divestment, Kalla assessed that negotiations could reach a common ground. This is because share divestment of up to 51 percent can be carried out in stages.
Kalla added that he had spoken with President Joko Widodo, Minister of Energy and Mineral Resources Ignasius Jonan and Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan regarding these negotiations. Negotiations must adapt to national interests so that all resources benefit the nation and the people at large.
Careful
Senior researcher at the Natural Resource Governance Institute, David Manley, said that the policy of divesting shares in foreign-owned mining companies in Indonesia should be carried out carefully. Share divestment does not necessarily have a positive impact on state revenues.
According to David, so far there has been no successful example of divestment of mining company shares to resource-owning countries. The reason is, after buying shares at a high price from debt, the taxes and dividends obtained from the mine are actually used up to pay interest on the debt.
Divestment policy researcher at Article 33, research institute for social change, Iqbal Damanik, added that in a number of cases of share divestment in Indonesia, regional governments which also have the right to buy shares were suspected of not having enough funds. A free share scheme for local governments where the mines are located could be a way out.
Meanwhile, Special Staff to the Minister of BUMN, Budi Gunadi Sadikin, in a discussion held by the Indonesia Mining Institute, yesterday, said that the formation of a BUMN holding company in the mining sector could increase reserves and resources. The way to do this is through the process of acquiring mining companies in Indonesia that are already producing or conducting exploration.
(NDY/INA/SYA/FER/APO)
Pages: 17
https://kompas.id/baca/ekonomi/2017/02/24/presiden-akan-bersikap-tegas-hadapi-freeport/
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