JAKARTA (IFT) - The US government assesses that the Indonesian government’s policy to renegotiate mineral and coal mining contracts will have an impact on the sectors’ investment climate. Ted Osius, Deputy Ambassador of the United States, said that contract renegotiation—when related projects are already in progress—worries investors as there is a lack of certainty in Indonesia’s investment laws and regulation.
According to Osius, there are actually plenty of American companies who want to invest in Indonesia’s mining sector, if the country’s investment climate is transparent and there are clear legal certainties.
"Requests to conduct a contract evaluation in the middle of a project development would only create uncertainties," Osius said in Bekasi, Wednesday.
Indonesia, according to Osius, currently requires infrastructure constructions to sustain economic growth. Investors should be given the assurance to invest in Indonesia. "I believe that Indonesia could actually improve its growth to eight percent instead of the six percent set target, if the government improves its investment climate," he said.
Tom Cutler, Director of the Office of European and Asia-Pacific Affairs, said that the certainty is needed so that there will be no misinterpretations between investors and governments that harm either party. Investors are requesting that the Indonesian government comply with contract terms that were agreed upon. Cutler pointed out that when American companies wish to bid on offshore oil and gas blocks management, they often do not know whether there are differences in the contracts’ interpretation, particularly regarding the contract terms.
With a very high potential of mineral resources, Indonesia is deemed profitably interesting by American investors. In 2010, the total income of American companies in the oil and gas sector reached US$ 10 billion. Cutler did not mention the value of income and investments targeted this year.
In addition to the oil and gas sector, Cutler continued, American companies are starting to eye on the geothermal energy industry. Indonesia has geothermal energy resources amounting to 29 thousand MW, 40 percent of the world's total geothermal energy potential. (*)
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