Indian new miners may cancel investment in RI

By Adianto P. Simamora

Indian investors who are currently looking for acquisition of coal miner around the world may prefer investing in South Africa, Australia and the United States due to the more certainty of regulations than Indonesia, expert from India said.

Head of Natural Resources at Crisil Risk & Infrastructure Solution Ltd., a subsidiary of Crisil Limited, a Standard & Poor?s Company, Gurpreet Singh Chugh said that Indonesia?s newly-issued regulation requiring the divestment of foreign share to 51 percent could discourage Indian investors from making investment in Indonesia although the country has some advantages compared to competitors of South Africa and Australia.

?Such regulation could dampen new investors especially those from India who are seeking certainty on regulation,? he said.

?I think Investors from India would make options to invest in South Africa, Australia as regulations are much more certain in these countries.?

He said that the regulations still left many questions unanswered such on whether the limiting of foreign shares would also be valid to the existing mining firms listed in the Indonesia Exchange Stock (IDX) or the mining contractors who have been in operation.

?I think Indonesia (government) need to be more careful in making the regulations (by assessing the same regulation applied in the competitors? countries of South Africa and Australia),? he said.

Government Regulation No. 24/2012 requiring the foreign-owned mines to gradually divest up to 51 percent stakes to Indonesian companies after 10 years of commercial operations from the previous of only 20 percent.

Editing by David Mustakim