In mining, central and local governments fight for hens

A number of young people from Riau demonstrated in the Ministry of Mines and Energy. They carried various posters and shouted various demands, including "Freedom for Riau," and "We can manage CPP Block."

Although their number was less then ten, their loud shouting disturbed people in the ministry. Luckily, the ministry's secretary general Djoko Darmono was willing to invite the protesters for a dialogue.

And many things emerged in the dialogue. They, in principle, demanded more shares of income generated from Riau province.

It has been known for so long that provinces rich with natural resources like Riau were among those lack behind in development. Most of their people live below poverty lines, while their wealth is transported to Jakarta.

The government has been slow in implementing the autonomy law, while local administrations are not patient. They wanted to get more of the income now, but - according to economist Umar Juoro -- they are still "afraid" with the central government. At the end, they hit the investors and force them to pay more to local governments.

This happens with the Newmont case, in which the Minahasa administration in North Sulawesi sued Newmont, demanding the company to pay taxes on something, which according to the company's contract of works with the central government is clearly not subject to taxes.

Then problems arise. Investors are in jitters, and the central government is confused on how to solve the issue. But luckily, the dispute is settled out of court.

What lesson can be learnt from the Newmont case? Mining consultant Rachman Wiriosudarmo, chairman of the Ecomine Nusa Lestari, said that the central government should act as a big brother for local administrations. He also describes investors as eggs producing hens.

"As a big brother, the central government should advise their small brothers not to cut the hens. Because if they cut the hens, they both will not get the eggs," he said.

He suggested that both the central government and local administrations take care of the investors so that they would continue producing profits, and therefore benefits all parties. (*)