Limiting foreign shares disincentive for Australian mining firms

By Adianto P. Simamora

Indonesian government regulation limiting shares of foreign investors in mining sector could become disincentive for Australian mining company in doing business in Indonesia despite efforts by the two countries in seeking to up partnership in mining industry, Australian Mining Conference and exhibition, Ozmine 2012 heard on Tuesday.

"The Government Regulation Number 24/2012 is the latest possible disincentive for Australian mining companies," President Director and Managing Partner of Kiroyan Partner, Noke Kiroyan said.

Under the new regulation, foreign-owned mines will be required to divest up to 51 percent of stakes to Indonesian companies after the 5th year gradually up to the 10th year of commercial operations, a change from the previous figure of only 20 percent.

There are currently some 120 Australian-related mining projects in Indonesia.

The sudden implementation date of May 2012 of the Ministerial Regulation Number 7/2012 on added value also caught many investors by surprises.

Editing by David Mustakim