Canadian miners to invest up to US$200m in Indonesia: Report

Canadian Ambassador to Indonesia Kenneth Sunquist said yesterday that Canada's miners are set to invest up to US$200 million in Indonesia this year, Indonesian Observer reported.

"Canadian investors may invest up to US$200 million in Indonesia's mining sectors this year," Sunquist quoted by Indonesian Observer as saying.

Sunquist said he expects investment to soar within the next three years.

The country's mining sector has been hit by prolonged security woes since three years ago.

The condition has been exacerbated by the implementation of the fiscal decentralization and regional autonomy drive that gives regional administrations greater control over wealth and natural resources in their respective areas.

Although mining regulations and policies are still in the hands of the central government, several miners have complained about more levies being slapped on by the local governments.

The ambassador said Canadian investment in Indonesia now totals US$9 billion, with the mining sector taking the lion's share.

Sunquist added that Indonesia is also Canada's largest trading partner in Southeast Asia.

One of Canada's giants operating in Indonesia is Canadian Inco Ltd, parent of Indonesia's top nickel producer PT International Nickel Indonesia (Inco).

Sunquist admitted that there has been a slide in Canada's investment in Indonesia due to problems and fears arising from the regional autonomy drive.

"Political instability is not the problem, because it is only short-term? but, investors set their eyes on the implementation of the decentralization," he said.

However, Sunquist said it would only be a temporary investment setback until investors fully understand the decentralization issue.

Many investors have greeted the 'hasty' implementation of the regional autonomy policy with dismay, worried that it would create more bureaucracy and loopholes for graft.

Under the new laws that took effect on January 1, 2001, the local administration will get 80% of revenue from general mining, forestry and fisheries, 30% from gas and 15% from oil.

"Canadian investors are currently in talks with the Energy and Mineral Resources Minister, Forestry Minister and Environment Minister to make sure that they get all they need to know about this issue," he told the paper in an interview on the sidelines of the opening of Betonel, the first Canadian paint store in Indonesia.

Sunquist said the new investment is proof that the Canadian business sector still has confidence in Indonesia.

"We're going to see investment coming in," he said.

Leading Canadian paint company Betonel has joined forces with PT Putramataram International Surabaya (PIS) in the Indonesian joint venture.

Paul Desjarlais, international vice president of Betonel said the store enables customers to chose or mix their favorite colors using computer facilities provided by the company.

Betonel CEO Freedy Pangkey said investment in the Jakarta store amounts to US$500,000.

"We plan to open eight more stores in Indonesia in the next two years," he said. (*)