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Major mining companies issued a `white paper' Tuesday,
calling on the government to retain the Contract of Work (CoW) system
under the proposed new mining law if it wanted to avoid creating a
major impediment to new investment.
The 'white paper', which was issued by a coalition of major mining
companies operating in Indonesia, will be submitted to the House of
Representatives' working committee charged with deliberating the mining
bill.
The companies' spokesperson, Subroto, who is also a former energy and
mineral resources minister in president Soeharto's administration, said
it would be better for Indonesia to stick with the COW system.
He said that the COW concept introduced by the 1967 Mining Law had
proven its worth in attracting many major foreign investors to the
country's mining sector.
Under the mining bill currently being deliberated, a mining firm will
operate under a license issued by the local authority in the area where
the mine is located.
With the introduction of a licensing system, the legal status of the
mining company will be rendered inferior to that of the local
government, especially as regards the resolution of disputes.
Unlike under the CoW system, where disputes were settled through
independent arbitration, under the new licensing system all decisions
will be up to the local authorities.
The status of mining firms was rendered inferior as the local
governments could revoke their licenses at any time, Subroto said.
"Any change from the previous Contract of Work system will be a major
setback for country's mining sector," Subroto said, adding that
Indonesia had become one of the world's biggest tin, nickel, copper and
gold producers over the past several years as a result, at least
partly, of the CoW system.
Irwandy Arif, representing the Association of Indonesian Mining
Professionals, said that the 'white paper' proposed a combination of a
licensing and CoW system as a win-win solution for overcoming the
deadlock.
The Golkar Party recently proposed that the concept of a "mining
activity agreement", which would basically serve in a similar way to
the current Contract of Work, be included in the draft law as an option
for investors.
The draft mining law, which was submitted to the House last year, is
currently being finalized. The House is expected to pass the bill into
law this month if the question of the controversial licensing system is
resolved.
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