mineIndonesia 2004 - review of trends in the Indonesian mining industry

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
  • resolving conflicts between the Contracts of Work and forestry regulations, without imposing additional financial or other burdens onto the mining companies
  • reduce illegal mining
  • 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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