Mining royalty hike won't deter new investment: official

The Ministry of Mines and Energy is optimistic that the recent hike in the royalty fee of new gold mining investment won't discourage investors to enter into the country's mining sector, according to a senior official.

Secretary general of the Ministry of Mines and Energy Djoko Darmono said on Friday that the royalty was only one component in investment decision.

"Investors will not run away with the higher royalty fee. There are still many other factors aside from royalty, which will attract investors. In terms of geological and natural resources potential our country is quite leading," Djoko told reporters.

He was responding to concerns that the government decision to raise the royalty fee in gold mining to 3 percent from 1 percent would deter new investment in the sector. The new royalty fee only applies to new investment.

Djoko added that investors would put a higher priority on security, stable political condition, and legal certainty.

"These three factors are quite dominant in attracting investors. Royalty is just one of the components. In the history of the Indonesian mining, there's no strong correlation between royalty and interest to invest in the mining sector," he said.(*)