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Kalla Says Freeport Issue May Jeopardize Investment Climate

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23 February 2017 20:00 WIB

Indonesian Vice President Jusuf Kalla. TEMPO/Praga Utama

TEMPO.CO, Jakarta - Vice President Jusuf Kalla said he did not want the dispute between the government and Freeport Indonesia to linger, as it will have a bad impact on Indonesia's investment climate.

"We don't want Indonesia's investment to become problematic because of the Freeport issue," Kalla said in a press conference aboard the presidential jet on Thursday, February 23, 2017.

According to Kalla, bring the dispute to international arbitration will do more harm than good, as the process will be longer. Kalla hoped that the issue can be resolved through negotiations. 

The vice president said settling a business dispute is not easy, especially since the government must take into account the state's interest of controlling its own natural resources whilst allowing it to attract investments and bring profits.

Kalla said that negotiations are being prioritized, and that he has spoken to President Joko Widodo, Energy Minister Ignasius Jonan, and Coordinating Minister for Maritime Affairs Luhut Panjaitan about it. "I asked them to settle this through good negotiations."

Indonesia and Freeport have yet to agree on the US-based miner's contract. Freeport feels that the government is being unfair for mandating them the company to change their contract to a special mining permit (IUPK).

Freeport said that the IUPK applies unfair provisions, as it mandates a 51-percent divestment and prevailing tax policies. What Freeport wants is a 30-percent divestment and a nail-down tax agreement.

The dispute began when the Energy Minister's regulation No.6/2017 on concentrate exports was issued, and Freeport was forced to cease its copper exports and halt mining activities. The situation could lead to the laying-off of thousands of workers. Freeport has said it may take the case to international arbitration if no agreement is reached within 120 days.

ISTMAN MP



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