Indonesian president looks to improve mining transparency
Indonesia's President Susilo Bambang has ordered a review of all mining permits issued by local governments in the country in an attempt to improve accountability and transparency in the sector, the cabinet secretary office said during a conference.
According to Reuters, the president set a December 2012 deadline for the energy ministry to complete the task, with the help of the domestic affairs ministry, the justice and human rights ministry and all local governments.
"President (Yudhoyono) has ... ordered improved monitoring of operations in the mining sector so that it is accountable," the cabinet secretary's office said in a statement.
Although the order was signed on Dec. 19, it was only made public recently. Although foreign companies have had significant influence in the Indonesian government, according to the news source, the move would help to consolidate operations for firms and lead to improvements in safety and mine productivity.
Reuters reported that Indonesia contains some of the world's richest mineral deposits and the fast-growing mining sector is responsible for 11.2 percent of the country's gross domestic product. Due to the significant resources that are available in the island nation, foreign companies have been stepping up operations in order to capitalize on positive global commodity prices trends.
Analysts have estimated that there are more than 100 unresolved disputes involving mine ownership licenses at the energy ministry, and the resolution of these issues would help to free up resources for both the government and mining companies, according to the news source.
Reuters reported that the elimination of illegal mining would also result from this shift to a more transparent sector, as the local governments would be encouraged to report this practice and work to fight further instances of illegal extraction.
The Jakarta Post reported that this consolidation of government resources in order to create a transparent mining sector comes at a time when the fuel subsidies for Indonesian citizens has been eliminated. This had hurt investment by foreign companies, and now that the adjustment has occurred, mining profits are expected to increase due to lowered costs.
According to the news source, the elimination of subsidies is a move that has been linked to positive returns for foreign investors in the oil, gas and mining industries, while helping to limit black market sales.