New Cabinet should focus on mining development

The economic team in the new Cabinet which will be soon formed by the newly elected president should pay a great attention on the country's mining sector that is expected to give larger contribution to the state revenues, a senior mining executive has said.

"We, in the mining sector, hope that the new government will give more attention on the mining sector. One of the most important thing in this sector is to give a legal certainty to investors," said Noke Kiroyan, a commissioner of PT Freeport Indonesia, as reported by Investor Daily on Monday.

According to Kiroyan, one of the best solutions to cope with the legal uncertainty is to replace the existing mining law Law No. 11/1967, which no longer fit with the current mining situation.

He said that the new mining law should regulate the mining company but also other related parties such as the local governments. The royalty sharing arrangement between the central government and the local government should be also clearly regulated in the new law so that there will be no more provinces complaining that they do not receive their royalty rights, Kiroyan said.

Provisional result of the second round of the country's first direct presidential election shows former general Susilo Bambang Yudhoyono control more than 60 percent of the votes counted, much higher than those received by the incumbent President Megawati Sukarnoputri.

At present, mining companies pay the royalties to the central government, which will later distribute part of the royalties to the local governments. However, many provinces complain that the disbursement of the royalty from the central government is often very late and is lower than what they are supposed to receive.

No less important, according to Kiroyan, is to adjust the royalty rate imposed by the government to mining companies to those applied by other countries. "The mining royalty rate in Indonesia should be more competitive, if we want to attract more investors," he added. (*)