Govt offices must better coordinate: oil, mining investors
Thursday, June 1 2006 - 02:25 PM WIB
In a meeting with several ministers, including Coordinating Minister of the Economy Boediono, Minister of Trade Mari Pangestu, Minister of Forestry MS Kaban, on Thursday, top leaders of the country?s mining and oil associations said conflicting regulations were among the main trouble faced by oil and mining investors in their operations.
The conflicting regulations caused legal uncertainty which is one of the main reason behind the decline in the investment in the country?s oil and mining sectors.
?The rise in oil prices has not led to an increase in exploration activities. This is because three things -- oil and gas law, production sharing contract and draft tax law -- are not synchronized. In fact, there are contradictions (among them). We in the oil industry do not expect incentives but the synchronization of the three,? Suyitno Padmokusumo of the Indonesian Petroleum Association (IPA) said.
Chris Newton, also of IPA, concurred, saying: ?There are many differences between the oil and gas law, production sharing contracts and draft tax law. We are not looking for incentives, but synchronization.?
Andrew Wilson of BHP Billiton said his company had found coal reserves in Kalimantan which were big enough for 50 years of production. The firm however faced problems in developing the project due to the lack of cooperation between the Ministry of Energy and Mineral Resources and Ministry of Forestry.
?There are two decrees issued by the Ministry of Forestry which are difficult for miners to comply with. If we look to the mining history in Indonesia, there was a cooperation between the Ministry of Forestry and the Ministry of Energy and Mineral Resources. In the past, if we wanted to lease a forest, there had been regulation governing the matter. But, today, the cooperation between the Ministry of Energy and Mineral Resources and the Ministry of Forestry do not work,? he said.
Jeffry Mulyono of the Indonesian Mining Association (IMA) said he was concerned about the slowdown in exploration activities in the mining sector.
?The prices of mining commodities now are good. What we are worried about is the fact that there are no discoveries of new reserves in new areas. We are worried about the future of our (mining) reserves,? he said.
He called on the Ministry of Forestry and the Office of State Minister of Environment to share the concern and be willing to talk with investors to find a solution to the problem.
Soedjoko of the Association of Indonesian Coal Miners (APBI) called on the government to declare coal ?a strategic commodity?. This is to prevent regional governments from freely issuing permits for any companies to mine coal.
?Today, regional governments treat coal similar to sands or stones. They thus issue many coal mining permits,? he said.
Boediono promised to talk with other ministers about the issues raised by all the mining and oil industry leaders during the meeting. (Godang)