Central government retains right to license foreign mining investment
Monday, September 18 2000 - 02:00 AM WIB
The central government would still handle the processing of the applications from foreign investors for contracts of work (COW) after the implementation of the Autonomy Law next year, a top official of the ministry of energy and mineral resources said.
Under the Autonomy Law No. 22/1999, which the government planned to implement in January next year, the provinces and regencies will take over from the ministry of energy and mineral resources the rights to manage their own natural resources, including the right to issue licenses to investors for the development of their mining resources.
Director general of general mining Surna Tjahja Djajadiningrat said over the weekend the government planned to allow the ministry to still handle the processing of the applications for COWs following the doubts of foreign investors about the ability of regional authorities to process their applications.
"Foreign investors are worried because thus far there is no regulation governing the transfer of mining licensing rights to the regions. They doubt the legal certainties for their investment, if the regions issue their own regulations.
"Thus, they still want the central government still handle the licensing process to ensure legal certainties," Surna told Petromindo.Com.
Surna made the statement following the calls by several mining executives on the ministry to process the applications for COWs that had been submitted by foreign investors to the ministry.
Gerry Mbatemooy, vice president of Britain-based mining giant Billiton Plc, told Petromindo that many foreign investors were strongly wishing the ministry to start negotiations on their applications for COWs.
The ministry has reportedly suspended the negotiations following the government's plan to transfer the mining rights to the regions under the Autonomy Law.
"I've got received many phone calls asking when the ministry will start negotiations on their applications for COWs," Gerry said.
Surna noted however that the ministry would well coordinate with the regions in processing the applications of foreign investors for COWs.
"We shall not be able to 'wantonly' issue licenses as (we did) in the past, because the regions should be involved (in the licensing process)," Surna said.
Surna said the mechanism was a solution to address the worries of foreign investors over the planned implementation of the Autonomy Law.
He noted that the government was seeking to boost the role of investors in the country's developmental program amid efforts to cut the government's loan. As such, the government has to make legal products that are acceptable to the market.
He said the ministry had sounded the regions out their views of the policy and found that they did not have reservations about it.
"We have explained (the policy) to the regions. I understand that they would rather prioritize the national interest than their ego.
"Some regions object to the policy. But it's the matter of how the central government will wisely explain the policy," Surna said.
Legislator Pramono Anung of the House of Representatives 's Commission VIII, which oversees mines and energy affairs, voiced supports for the government's plan, citing that 90 percents of the regions had not prepared for the implementation of the Autonomy Law in terms of human resources.
He said the policy did not run counter to the Autonomy Law and the Intergovernmental Fiscal Balance Law No. 25/1999, as the regions would still be involved in the licensing process and they would receive revenues from the development of their natural resources in accordance with the Intergovernmental Fiscal Balance Law. (Lia KS)