Going for Gold

Whatever the government's decision on Freeport Indonesia, the 1945 Constitution must be its main point of reference. The Constitution clearly states that the soil, water and natural resources of Indonesia must be managed by the state and must be exploited to the maximum for the benefit of the Indonesian people. The government is mandated to put this principle above all in its negotiations with the American company before its contract of work ends in 2021.

In line with the latest government regulation, negotiations on Freeport's contract extension must take place two years before its expiration date. By comparison, in the risky oil and gas sector, investors are given the opportunity to submit their contract extensions 10 years before their expiration date. So, we can understand if Freeport wants an earlier decision, given that the company plans to invest another US$18 billion, or more than Rp 240 trillion, over the next few years.

October 20, 2015