RI, JAPAN TO NEGOTIATE INALUM THIS MONTH

By Andi Abdussalam

Jakarta, Nov 9 (ANTARA) -  Indonesia and Japan will this month start negotiating the future of  PT Indonesia Asahan Aluminium (Inalum), an Indonesia-Japan joint venture the contract on which  will expire in 2013 after operating for about 30 years in Asahan, North Sumatra.          The Indonesian delegation to the negotiations would be led by Industry Minister Mohammad S Hidayat. Initially scheduled to be started on November 5, 2010, the talks were expected to be held in the middle of this month, after the Asia-Pacific Economic Cooperation (APEC) meeting in Japan on November 7 - 14, 2010.          "The exact schedule will be made after I return from attending the APEC meeting," the industry minister said.          The initial meeting scheduled for November 5 was canceled because the president had not yet issued a decision on the formation of Indonesia's negotiation team.          "Now, the presidential decision has been issued and I have been assigned to chair the team," Minister Hidayat said.           The minister said earlier that the government would do its best to serve and defend the  national interest in the negotiations with Japan.          With an annual production capacity of 230,000 - 240,000 tons, Inalum which is  58.87 percent  owned by Japan and 41.13 percent by the Indonesian government, will see  its contract expire in 2013.           Up to now, Japan with 12 private Japanese firms in the joint venture is the majority shareholder through Nippon Asahan Aluminium (NAA). A total of 50 percent of NAA shares are controlled by  the Japan Bank for International Cooperation (JBIC) while the remaining 50 percent are owned by Japanese private firms such as Sumitomo Chemical Company Ltd, Sumitomo Shoi Kaisha Ltd, and Nippon Light Metal Co Ltd.          As the cooperation project will expire in 2013, Indonesia and Japan will renegotiate the future of the aluminum producer firm. Japanese investors have submitted a proposal which in essence asked that the contract be extended for another 30 years beginning in 2013, with the same share composition.          However some quarters have called on the Indonesian government not to extend the contract of Inalum with the Japanese side.          The rejection was among others raised by legislators Satya W Yudha and Dito Ganinduto of the House of Representatives (DPR)'s Commision VII on energy affairs. Rejection also came from Executive Director of Indonesia Resources Studies (Ires), Marwan Batubara.          Satya W Yudha said Japan had bad records in Inalum management in the past 30 years. He said that the presence of Inalum did not benefit the government and the local people. "The Indonesian government must be firm in taking over the Inalum management and terminate the contract with Japan," he said.          His colleague Gito Ganinduto said Indonesia had state-owned firms (BUMN),  technological capability, human resources, funding, raw materials and markets so that it was ready to take over Inalum.          Executive Director of the Institute for Development of Economics and Finance (Indef) Ahmad Ernai Yustika said that the government should own 100 percent stake of Inalum and should not give a chance to Japan to extend the contract.          "The government should fight for the interest of the nation so that Inalum would be manage by our own ," he said.           Therefore, he said, there is no need for the government to follow the audit results of Ernst & Young over Inalum. Ernst & Young (E&Y) last was conducting an auditing over the financial performance of PT Inalum. The results of the auditing are expected to serve as a reference for the government to take a decision.           The same voice was also aired by Executive Director of the Indonesian Resources Studies (Ires), Marwan Batubara. He said that the audit of E&Y should only serve as a reference for the government to know the amount of compensation it could spend after the contract with Japan was terminated.          He asked E&Y to conduct the audit professionally and transparently. "It may not take side with either side of the two," Marwan who is a former member of the Regional Representatives Council (DPD) said.          Earlier Minister of Industry MS Hidayat said the results of E&Y auditing would be used by the government as a reference when it held a negotiation with Japan.          Dito added that it was now time for Indonesia to manage Inalum itself and discontinue the Inalum  contract with Japan. Japan has enjoyed the benefit in the management of Inalum for about 30 years.          In the meantime, Minister of State Enterprises (BUMN) Mustafa Abubakar has sent a letter to the Asahan Authority on October 29, 2010, which informed that Indonesia would take over Japanese shares with Inalum as of October 31, 2013.          A consortium of BUMNs consisting of state-owned power utility PLN, tin mining PT Aneka Tambang, Asset Management Firm (PPA) and PT Danareksa will be involved in the share takeover.          Earlier, Chief Economic Minister Hatta Rajasa said that the government had prepared two options in the face of negotiations with Japan over the Inalum future.          The second option is that the government and Japan would continue their cooperation but with options that benefit Indonesia. "For instance, the Indonesian government should be the majority share holder," he said.***2*** (T.A014/A/HAJM/A/S012) 09-11-2010 00:19