New Mining Law Passed

JAKARTA ~ Parliament passed a long-awaited mining law on Tuesday designed to boost government revenues and remove obstacles to foreign investment.

The law was passed at a plenary session after more than three years of deliberations by a special committee tasked with overhauling the legislative framework covering mining in the resource-rich country.

Lawmaker Sonny Keraf, who headed the working committee that designed the bill, said it would encourage business by removing legal uncertainty while boosting the revenues and powers of provincial governments.

“It gives a chance for people to do business and gives leeway for provincial administrations to enforce provincial autonomy,” he said.

But the Indonesian Mining Association has criticized the law, saying it will deter investment rather than help to unlock the country’s under-exploited mineral wealth.

Association executive director Priyo Pribadi Soemarno told Dow Jones Newswires ahead of the plenary session the new rules weakened security for large-scale investments and could push big industry players away to countries with more conducive investment climates.

“This mining law (shows the government) is not learning from the current situation, with the global crisis,” he said.

“This decision says ‘no more investment, we don’t need more investment.'”

Countries with freer investment regimes such as Malaysia and the Philippines could continue to attract mining investment while Indonesia languished, Soemarno said.

The new law installs a licensing system for most mining investments in place of the previous contract system which large investors saw as more secure and simple, he said.

Companies would have to acquire a mining licence from local governments, and new permits would be needed for each stage of the mine from exploration to production.

Under the Contract of Work system all these steps were merged into a single contract with the central government.

Filed under: The Nation

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