Govt proposes to increase foreign firm divestment to 51%

The government is planning to oblige foreign firms to divest its stake up to 51 percent from 20 percent, currently under government regulation (PP) No 23/2010 on the implementation of the mineral and coal mining business activities.

At the present, government is finalizing the draft revision for PP 23/2010, which includes obligation of foreign firm in IUP holder to divest its stake until up to 51 percent from 20 percent, currently,

?The required divestment is raised from 20% to 51%. After five years of production, we expect the company has already reached its breakeven point. This change was requested and proposed by the Parliament,? the legal official at the directorate general mineral and coal told Petromindo.Com.

Further, the official clarified that the 51% divestment will not include the shares owned by the public through capital market. This requirement will affect companies with IUP. ?It will not affect companies with Contract of Work (CoWs) and Coal Contract of Work (CCoW) status. We have to wait until their contracts expire, or we will try renegotiation with them so that they can as soon as possible adopt the IUP system,? the official added.

When petromindo.Com contacted Thamrin Sihite, Director General of Mineral and Coal, he confirmed the figure, saying that foreign ownership should divest their stake up to as much as 51 percent, but it is still in the draft stage. (sonar/yosef)