"Why investors are reluctant to sign contracts"

The reluctance of some 25 foreign mine operators to sign their contracts of works with provincial governments should be investigated to ensure that the country?s mining sector remain attractive to foreign investors, according to a senior official at the Investment Coordinating Board (BKPM).

Yus?an, the deputy of the chairman of the investment board, said in Jakarta on Saturday that the government should be able to find out the reason why they refused to sign the contracts. "Their refusal could reflect the weakness of the existing system," he added.

According to him, governor or the head of the provincial administration could not act as the signatories of the mining contracts signed with foreign investors, as all international level agreements should be guaranteed by the government.

He said that that BKPM and the Ministry of Home Affairs were still discussing a new procedure, which could remove the problem. "If the autonomy law is amended, the change should also be made on the authority related to the mining sector," he added.

Under the new autonomy law which was introduced last year, the provincial administrations have the authority manage their own economy including the mining sector. (*)