Many legal products hamper oil and mining operations

Several laws and regulations issued by the government turn out to have hamper investment activities in oil and mining sectors in eastern Indonesia, causing potential investment loss of about US$1 billion, according to a study made by the office of the ministry for the development of eastern Indonesia.

"At least 21 mining companies have pulled out due to the uncertainties created by regulations," Made Astawa Rai, the deputy of the state minister for the development of eastern region, was quoted by Bisnis Indonesia as saying on Monday.

According to the study, seven regulations issued by different ministries had been proven to be counter-productive and discouraged investment activities in the eastern region.

The seven regulations include a ministerial decree on the size of the country?s existing forest conservation area. This new regulation has caused an expansion of the size of certain conservation area such as the National Lorentz Park in Papua. The expansion has caused the conservation area to overlap with the concession area of mining companies.

The second controversial legal product is the forestry law no. 41/1999 which bans mining companies from operating open mining pits in conservation forests. At least 50 mining concessions have to halt their activities due to the issuance of the law. The other laws include the ministerial decree on the development of small islands, the law No: 34/200 related to tax payment on heavy equipment operated by mining companies, the government regulation No: 144/2000 on the change of the tax status of coal from untaxable to taxable product and the government regulation No: 82/2001 on water treatment. (*)