Uncertainties cause major setback in mining sector

Investment in the country?s mining sector has declined sharply in recent years due to uncertainties in security situation and lack of incentives provided by the government, the head of the energy department of the Indonesian Chamber of Commerce and Industry (Kadin), AM Kusumo, has said.

Speaking to afternoon daily Suara Pembaruan on Friday, Kusomo said that the condition could further cause a major setback in the country?s mining sector.

Quoting data from PricewaterhouseCooper (PWC), he said that the total investment in mining activities in Indonesia which reached between US$3 billion and US$4 billion in late 1990s had sharply dropped to just US$400 million at present.

Kusomo attributed the sharp drop in new investment in the mining sector on to the lack of new incentives in mining activities and due to the inability of the government to provide secure environment in the mining sector.

According to him, investment in Indonesia?s mining sector has been too expensive. Total taxes (royalty and taxes) paid by mining companies in Indonesia has reached 60 percent, much higher than 40 percent in Australia, and between 30 percent and 35 percent in other countries.

"With such a condition Indonesia is no longer attractive for investment activities," he said. He feared that Indonesia would no longer be able to export gold beginning 2006 and copper beginning 2012, if the government fails to make any significant improvement in coping with the problem. (*)