Govt urged to revoke PP 20 to expedite divestment of Freeport stake

Legislator Pramono Anung urged the government to quickly revoke Government Regulation No. 20/1994 (PP 20) to force Freeport McMoran divest its stake in Freeport Indonesia into local entities.

"I think what the government must do now is revoke PP 20 because with that ruling Freeport can delay the divestment," Pramono, a member of the House of Representatives' Commission VIII, said after attending a hearing between his commission and former minister of mines and energy Ginandjar Kartasasmita.

PP 20 allows 100 percent foreign ownership in various sectors, including in mining.

''If PP 20 is revoked, then Freeport (McMoran) has to divest at least 45 percent of its ownership in Freeport Indonesia," he said.

According to Ginandjar, Freeport's contract of work (COW) firth generation that was signed in 1991 requires the company to divest at least 51 percent of stake into local entities.

And if Freeport conducted the divestment through initial public offering (IPO) of shares on the Jakarta Stock Exchange, divestment of only 45 percent of ownership would be enough.

However, after former president Soeharto issued PP 20, Freeport refused to divest more of its stake in Freeport Indonesia to local entities. It takes refuge under PP 20.

Under the previous COW, Freeport had been required to divest until 20 percent of ownership to local entities, 10 percent to the government and another 10 percent to Indocopper Investama of the Bakrie Group. But later, most of Indocopper's stake in Freeport was sold to Nusamba Mineral, controlled by Moh. "Bob" Hasan. (*)