Investment in mining sector steadily declines

The new investment in the country?s mining sector has showed a steady decline during the past five years due to the worsening investment climate, Kompas reported on Tuesday.

According to Simon Sembiring, the head of the research and business development department at the Ministry of Energy and Mineral Resources, the total investment in the mining sector dropped to only US$170 million in 2002 from more than US$2 billion in 1999.

A total of 235 companies had obtained contracts of works to explore mineral resources in the country but only 38 of them were still active, said Sembiring.

According to Sembiring, factors behind the deteroriation of the investment climate include the prevailing legal uncertainties, the lack of fiscal incentives, the issuance of the forestry law of 1999 which bans open-pit mining operations in forestry areas and the growing illegal mining activities.

Sembiring said that the government had taken a number of measures to cope with the problems including the issuance of the governmental regulation No. 75/2001 to give legal certainty in existing mining companies and to speed up the process of the drafting of the new mining law and its implementation regulations. (*)