Stronger mineral prices drove Indonesian mining industry profits higher in 2003. However, the Indonesian mining industry continues to face difficult investment conditions and business challenges which have a dramatic negative impact on the level of exploration and investment spending.
If the investment climate for the mining sector improves, Indonesia has the potential to become a world class mining country which will provide substantial benefits to Indonesia. Seven issues require immediate attention to improve investment conditions.
They are:
- restoring long-term certainty in the Contract of Work system, including tax stability (locking in tax conditions for the contract term)
- improving the competitiveness of the taxation and royalty system relative to other prospective countries, including restoring VAT refunds for gold and coal companies
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- resolving conflicts between the Contracts of Work and forestry regulations, without imposing additional financial or other burdens onto the mining companies
- minimizing the potential for ‘over regulation’ in proposed changes to regulations affecting mining, including regulatory duplication between central and regional governments
- ensuring fairness in divestment of foreign interests and mine closures
- improving certainty of legal interpretation of Contracts of Work and regulations
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