PEOPLE WANT FOREIGN FIRMS TO REDUCE DOMINATION OF MINING RESOURCES

By Andi Abdussalam

Jakarta, June 10 (ANTARA) - Alarmed by the increasing rate at which foreign companies are gaining  control over Indonesia's national resources, some quarters have urged the government to take  bold and concrete steps to safeguard the country's natural resources by terminating contracts  containing unfair terms or nationalizing ventures set up based on agreements deemed unfair to Indonesia.          In the face of the many mining contracts now to expire, the government has to take anticipatory steps to renegotiate the  contracts or nationalize the ventures concerned to prevent the country's natural resources from falling further into the clutches of foreign companies.          Senior economist of the Advisory Group on Economic Industry and Trade (Econit) Hendri Saparini said foreign firms were trying to control the Indonesian economy and redirect national economic policies to serve their own interest.          "In order to make it easier for foreigners to take control over Indonesia's natural wealth, they bribe politicians and government officials to produce regulations in favor of their interest," Hendri Saparini told a discussion on "My Country Under the Shackles of Corruptors," last week.          Hendri said companies often gave bribes to officials in order to obtain mining licenses. "This is saddening because the licenses they get by way of bribing are later sold to other businesses for  a higher price," she said.          She said many laws were pro-foreigners and disadvantaged the Indonesian people in the long run. He cited as an example Law No. 30 / 2007 on the mining sector. This law among others had a stipulation which enabled foreign firms to gain control of  95 percent  of the mining sector.          The senior Econit  economist said the clause in the law should be revised because it would harm the interest of the Indonesian people in the long run.          In addition to the revision of the law, the government also needs to adopt he principle that it would only sign contracts whose clauses were fair to the nation.  Mining licenses should also be evaluated.   Therefore, she said, the government should evaluate the implementation of the mining licenses, whose number reached 6,000, to check their designations.          After all, in the gas and oil sector for example, many contracts would expire in 2018. In this case, Marwan Batubara of Indonesia Resource Studies (Iress) has reminded the government of the need to take strategic and beneficial steps to the state before the expiry of oil and gas block contracts with foreign companies.          "There will be tens of oil and gas contracts which will expire up to 2018. The government should immediately take strategic steps which are beneficial to the state before the oil and gas block contracts end," Marwan said.          National oil companies (NOC) should be given the first priority to cultivate the state resources so that they would greatly benefit the people.          If Article 33 of the 1945 Constitution is to be observed, Pertamina as a state company whose shares are 100 percent owned by the state, must be given the first priority to cultivate oil and gas blocks whose contracts have expired.           Marwan said with the constitutional message, even without request, the government should assign Pertamina to cultivate the oil and gas blocks. "But in practice, Pertamina rarely got the assignment. It even often became the victim such as in the case of Cepu and Semai V blocks," he said.         Marwan said the matter was urgent to be done by the government to anticipate the extension of a number of oil block contracts such as the Mahakam oil field and the South Natuna block and others.         In line with the calls of various quarters, the government is considering renegotiating investment contracts with foreign companies engaged in oil, gas and coal mining that have not been in conformity with the law on mineral and coal mining.          In principle, the government respected the contracts but deemed it necessary to review unfair contracts, Finance Minister Agus Martowardoyo said at the State Palace last week.          "In 2011 there are many contracts of work and so forth that we need to review to see whether or not they represent win-win solution and whether or not they are unfair. That's what we want to review and study," he said.           But he stopped short of naming the foreign mining companies.  "All of them. We cannot mention them. But they are mostly engaged in natural resources management," he said.          The director general of mineral and coal mining of the ministry of energy and mineral resources, Thamrin Sihite, said meanwhile contracts made with investors would be honored.          "Like in a marriage if divorce is to be done it must be based on an agreement. So it will not be done just like that," he said.  He said a number of mining contracts have been agreed to be adjusted with the law. He however declined to name the contracts. "As soon as deal is made we immediately sign it," he said.          However, some called for nationalization of companies in the mining business. "It would be more appropriate for the government to nationalize the mining business licenses," chairman of the Indonesian Green Institute Chalid Muhammad said in a discussion on renegotiation of natural resources contracts early this week.          Chalid said that now was no longer an appropriate time to discuss renegotiation of the contracts because they were no longer contextual. If the contracts were renegotiated they would be just the same, as they would eventually be diverted from foreign firms to national firms where foreigners also owned shares.          He said that some of the shares of national firms turned out to be also controlled by foreign holders. Therefore, Chalid who is a former director of the Indonesian Environmental Forum (Walhi), said that the fund obtained from contract renegotiation would neither be effective as it would not flow to the people.          He reminded that a number of state leaders had done nationalization at present such as Evo Morales (Bolivia), Lula da Silva (Brazil), and Hugo Chavez (Venezuela).          "They are not fined with penalties and are not taken to the international arbitration," he said.***5*** (T.A014/A/HAJM/13:55/f001) (T.A014/A/A014/F001) 10-06-2011 14:31:3