25 mining companies suspend their businesses

At least 25 mining companies signing work contracts with the government have decided to suspend their businesses due to uncertainty in the investment industry in Indonesia, the Satunet.com reported on Sunday.

Twenty-two out of the 25 companies specialize in gold and coal mining, Director General of General Mining Surna Tjahja Djajadiningrat said on Saturday without giving details on their names.

Their work contracts cover a number of areas, including Aceh, North Sulawesi, South Kalimantan and Irian Jaya, he said.

"Besides being affected by the falling prices of gold and coal on the world market, the investors are of the opinion that the business climate in Indonesian are not conducive due to the current unstable political problem," he said.

Several foreign investors did question about the investment climate, but Surna admitted that he found difficulties to answer them. Besides the investment climate, the investors also expressed concern over the overlapping in the mining regulations.

He cited as an example Regulation No. 41/1999 on forestry, which banned open mining activities in conservation forest areas, whereas many work contracts whose areas are located in such forests were signed long before the new regulation was issued.

The government should actually uphold the contracts and not just banning them from operating, he said.

Surna said that the investors also questioned Regulation No. 22/1999 on decentralization. "They express fear that they will be asked to renew their work contracts with regional governments," Surna said.

The Ministry of Mines and Energy is currently preparing a ministerial decree on the detailed implementation of Regulation No. 22 so as to prevent such overlapping, Surna said without elaboration. (*)