Maravi

(HERALD) Zim-style indigenisation policy for Indonesia

COMMENT - Zimbabwe Leads The Way. This is why you have been bombarded with propaganda and political hate speech against the country, the government and President Mugabe for the last 10 years.

Zim-style indigenisation policy for Indonesia
Friday, 16 March 2012 00:00
Herald Reporter

INDONESIA has adopted a policy similar to Zimbabwe’s indigenisation model, compelling foreign-owned mining companies to cede 51 percent of their share ownership to Indonesians.

International media reports said under the new ownership structure, foreign mining companies operating in the Asian country would be limited to 49 percent share ownership. Indonesian President Susilo Bambang Yudhoyono reportedly signed the decree on February 21, but the announcement was made on Wednesday.

The ruling states that a foreign-controlled mining company has an obligation to divest 51 percent of its share to Indonesian parties — including the central government, regional government, state enterprise or other domestic investors — by the time it completes 10 years of production.

The divestment should reach 20 percent in the sixth year of production, 30 percent in seventh year, 37 percent in the eighth year, 44 percent in the ninth year and 51 percent in the tenth year, according to the regula-tion.

This ruling is said to apply to companies mining coal, minerals and metals.

“The government aims for domestic mining companies to grow and be able to be as good as foreign companies, therefore we are increasing the divestment obligation [of foreign companies] to 51 percent,” deputy minister of energy and mines minister Widjojono Partowidagdo said.

“What the government does is always to help the public’s welfare,” he added.

Indonesian director of mineral business development at the Energy and Mines Ministry Dede Ida Suhendra said the new 51 percent divestment regulation will be discussed with foreign mining companies, such as US-based Freeport-McMoRan Copper & Gold and Newmont Mining Corp., under a renegotiation of contracts.

“The negotiations are still going on,” Suhendra said.

“There are seven points that the government will renegotiate, including the divestment clause and royalty,” he said.

Under Zimbabwe’s indigenisation policy, all foreign companies with an asset value of US$500 000 and above are required to cede 51 percent stake to the locals.

Following the enactment of the Indigenisation Act, protracted negotiations between the Government and mining companies took place to ensure compliance with the law.
Most big mining companies such as Mimosa, Zimplats and Unki have since complied with the indigenisation regulations.

Implats, the South African company that owns Zimplats, recently agreed to cede 29 percent of its shares to Government as part of the indigenisation process.
Zimbabwe’s indigenisation regulations had been criticised by some quotas of the Western media who argued they scared away investors.

However, the Government insisted that it wanted local people to actively participate in the mainstream economy.

Firms in the mining and banking sectors had already submitted their indigenisation plans.

Companies in the manufacturing sector are currently submitting their plans with reports from Government indicating that the response was encouraging.

The Indonesian government had earlier said that it wanted to increase the royalties received from the mining contracts, and both Freeport and Newmont have agreed to renegotia- te.

Freeport Indonesia operates the Grasberg mine at Papua, in the eastern part of the country.

Freeport-McMoRan Copper & Gold has 90.64 percent stake in Freeport Indonesia and the government has 9.36 percent stake.

Newmont Mining Corp. owns 31.5 percent of Newmont Nusa Tenggara, Japan’'s Sumitomo (24.5 percent, local company Pukuafu Indah (20 percent) and local Multi Daerah Bersaing (24 percent).

Newmont Nusa Tenggara owns the Batu Hijau mine in West Nusa Tenggara, which is estimated to contain 11.47 billion lb of copper and 11.57 million oz of gold.

Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE)

posted by MrK @ 5:39 AM