Investment in mining sector drops sharply

Investment in the country's mining sector has dropped sharply over the past several years because investors see the country?s investment climate as less conducive, Bisnis Indonesia newspaper reported on Wednesday.

The paper quoted Wimpy S. Tjetjep, director general of geology and mineral resources at the ministry of energy and mineral resources, as saying that the total investment in 1999 reached US$1.3 billion. Investment in 2000 was recorded at $519 million and the amount declined to $360 million in 2002.

?In fact, the government has not received any new investment proposal in the mining sector especially from foreign investors through contracts of work (CoWs) since 1999,? Wimpy said at a meeting on promotion of government?s policies regarding energy and mineral resources in order to attract more investment for the recovery of national economy in Jakarta on Tuesday.

The fall in foreign investment in the mining sector, according to Wimpy, was caused by factors like political stability, security and tax burdens that had reached 60 percent. Besides, there are also problems like the prohibition of open-pit mining activities in protected forests, illegal logging, imposition of strict environmental standards and the implementation of regional autonomy that led to the decline, he said.

Out of a total of 235 companies that have signed CoWs with the government, only 38 companies are still active, 24 have delayed their operations and 173 others had withdrawn, he said. (*)