The renegotiation process between the Indonesian Government and PT. Freeport Indonesia's strong profile and mass media coverage shows that legal certainty and a conducive investment climate for mining investment are not easy things to achieve. Then the question arises: to what extent did the various negotiation efforts and exploration of existing options ultimately result in a good agreement (good deal) which will provide benefits to society at large and not just benefit a few elites or cartels in the mining business in Indonesia.
Therefore, the Faculty of Social and Political Sciences (FISIPOL) Gadjah Mada University collaborates with Research Center for Politics and Government (PolGov) Department of Politics and Government and Global Engagement Office (GEO) FISIPOL UGM, presents a public discussion series with the title: "Negotiation Politics in Mining Divestment: Benefits and Welfare for Whom?"
The event was held on Thursday, March 9 2017 starting at 09:30 at the Digital Library Auditorium Room, 4th Floor, FISIPOL UGM. The discussion was moderated by Hasrul Hanif, MA (Lecturer at the Department of Politics and Government UGM). The speakers who attended the discussion were as follows:
- Ermy Ardhyanti (Coordinator of the Extractive Industry Governance Division-Article 33)
- Emanuel Bria (Asia Pacific Senior Officer-Nature Resource Governance Institute)
- Mukhlis, SE Akt. (Tax Manager PT. Freeport Indonesia)
- Ir. Josaphat Rizal Primana, M.Sc (Director of Energy, Mineral and Mining Resources – Bappenas)
The event was opened by the Dean of FISIPOL UGM, Dr. Erwan Agus Purwanto, M.Si. In his speech, Erwan emphasized that students were expected not only to listen to the speakers but also to actively contribute to discussing the theme of negotiation politics. He revealed that the issue of mining negotiations, especially the Indonesian Government and PT. Freeport Indonesia is becoming tough and according to social science and political science it cannot be separated from two things.
"Firstly, geopolitical changes, international geostrategic changes, if we talk about the history of when Freeport entered Papua, I think are related to global geopolitical changes at the time of the massive colonialization event at the beginning of the 20th century. Secondly, the national political condition since 1998, Indonesia has increasingly become worse. "A democratic country means that if the government makes a decision, it cannot make the decision alone, unilaterally but must involve the community," explained Erwan.
After the opening remarks, the event continued with giving mementos to all the speakers by the Dean of FISIPOL UGM and a group photo. Then play a promotional video regarding PolGov training capacity building related to the governance of extractive industries. The event continued with handing over the event to the discussion moderator, namely Hasrul Hanif, MA (Lecturer at the Department of Politics and Government UGM).
At the opening of the discussion event, Hasrul Hanif gave an introduction in the form of a background to FISIPOL UGM's theme of Political Negotiations in Mining Divestment. "There is an interesting issue regarding the Freeport mining process in Indonesia, why is FISIPOL suddenly talking about mining? And discuss further? The answer is basically based on article 33 so it is important to discuss mining governance in Indonesia further. "So we bring in competent sources," explained Hasrul.
The first resource person who sparked discussion was Mukhlis, SE Akt. (Tax Manager PT. Freeport Indonesia) is also an alumnus of Gadjah Mada University. He said that the mining industry is something that is difficult to understand while the people who work inside do not want to explain it to the outside. "There are many versions in the media such as Kompas that explain how Freeport is and that is not accurate. Because in fact, there are 2 geological deposits, the first is primary (the essence is still combined with other minerals) and the second is alluvial/secondary. It was reported in Kompas that Freeport produced 726 million tons of gold, in fact, in other media publications, gold production throughout the world was only 2500 tons. "Therefore, we need to be careful in selecting references," said Mukhlis.
Mukhlis further explained regarding the politics of negotiations, negotiations have been slow since 2009 but there has been no agreement regarding the work contract until now. “The problem is that there is no incentive from the company to quickly agree on the area size. Second, companies generally agree on the 6 values mentioned in one package. Minerba Law in 2009, there is a message which has multiple interpretations and needs to be adjusted."
Then the material was presented by the second resource person, namely Emanuel Bria (Asia Pacific Senior Officer-Nature Resource Governance Institute). In her presentation, Bria, her nickname, focused on explaining divestment. The state has 4 hats in managing natural resources, namely: the state as owner, the state as tax collector (Freeport contributed 32% to Indonesia), the state as investor and the state as mining operator. “The choice of each country depends on the main objectives of government policy. Available risks, the level of diversification of a country's economy, the economic level of a country, the administrative and technical capacity of a country. During initial negotiations, it is determined what the agreement will be like. The state loaned him shares from the company and would later be paid back. How about Indonesia? If investment reaches 51% it can be called nationalization. "The majority of investment in Indonesia is foreign investment," explained Bria.
After that, the material was delivered by the third resource person, namely Ir. Josaphat Rizal Primana, M.Sc (Director of Energy, Mineral and Mining Resources – Bappenas). He discussed national mining development, whether divestment was one answer. "The conditions for divestment are that there are government institutions, both BUMN and BUMD involved, a transparent mechanism in the divestment process because there is a fear of being ridden by something political, there is a government that is very strong in its intention to bring prosperity and social justice. Beyond divestment there are important things in natural resources, including: how to provide good deal, its income can improve the welfare of society, as well sustainability. "The issue of divestment is not the first issue in Indonesia, in 1991 Freeport gave shares to Indonesia," he explained.
Finally, Ermy Ardhyanti (Coordinator of the Extractive Industry Governance Division-Article 33) spoke about the pseudo-sovereignty of divestment practices in Indonesia. "Divestment policy is divided into two things, namely regulatory analysis and central government and regional government policies. The development of mineral and coal divestment regulations is increasingly leading to Resources Nationalism. From year to year it has involved local governments. The recommendations we offer are for the central government to make regulations on funding schemes/distribution of divestment amounts at each level of government, strengthen BUMN and BUMD institutions, involve government banks in divestment funding, golden share "to regional governments, and tightening regulations on the obligations of companies involved in divestment management to report financial reports periodically," he concluded.
Then the discussion continued with questions and answers, and discussions between the resource person and the students present. The discussion event ended at 12.30 WIB. (/dbr)
Photo: Public Relations of the Faculty of Social and Political Sciences UGM
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