Publish What You Pay (PWYP) Indonesia urges the Government to uphold state sovereignty by implementing Law Number 4 of 2009 concerning Mineral and Coal Mining Law and prioritizing the interests of the Indonesian people in the renegotiation process between the Indonesian Government and PT. Freeport Indonesia (PTFI). The Indonesian Government must maintain the state’s authority and not submit to the interests of PTFI, which are detrimental to the state’s interests and tend to conflict with the Minerba Law.
The National Coordinator of PWYP Indonesia, Maryati Abdullah, reminded the issuance of Government Regulation (PP) Number 1 of 2017 concerning the Fourth Amendment to Government Regulation Number 23 of 2010 concerning Mineral and Coal Mining Business Activities, which was followed by the Ministerial Regulation from Minister of Energy and Mineral Resource No.5, 2017 concerning increasing the Added Value of Minerals through Domestic Processing and Refining Activities. The Minister of Energy and Mineral Resources Regulation No.6 of 2017 concerning Procedures and Requirements for Providing Recommendations for the Implementation of Foreign Sales of Mineral Processing and Refined Minerals, which contradict the Minerba Law, have shown helplessness to the Indonesian Government before PTFI.
“This is increasingly evident with the granting of concentrate export permits to PTFI with the provisions of the Temporary Mining License, through the Minister of Energy and Mineral Resources Number 28 of 2017 concerning Amendments to the Minister of Energy and Mineral Resources Number 05 of 2017 concerning Increasing Mineral Added Value through Domestic Mineral Processing and Purification Activities which incidentally contrary to Law number 4 of 2009 concerning Mineral and Coal Mining. The provisions for the issuance of the Temporary Mining License in the revised Minister of Energy and Mineral Resources Regulation are increasingly overlapping and contradicting the Coal and Mining Law”, explained Maryati through her press statement to hukumonline, Tuesday (11/7).
Besides, Maryati assessed that there are indications of an easing of the export duty value imposed on PTFI from 7.5% to only 5%, which contradicts the Minister of Finance Regulation (PMK) Number 13 of 2017 where the calculation is based on the physical progress of the construction of the facility. Refining (smelter).
“Again, PTFI has received extraordinary privileges from the Indonesian government,” she said. (Also read: Government, academics, business people and activists talk about Freeport’s fate)
Therefore, the Government’s consistency in enforcing the Coal and Mining Law is urgently needed in discussing negotiation points with PTFI, including regarding investment stability such as fiscal provisions, share divestment obligation, continuity of operations, and construction of processing and refining facilities (smelters).
She emphasized, for example, in fiscal taxation provisions, the Government must remain consistent in fighting for prevailing provisions, which in addition to being regulated in statutory provisions also open up space for the Government to adjust to the development of tax reform that is being pushed because this prevailing tax claim is a natural thing for Indonesia, as the home country.
Maryati Abdullah added that instead of discussing the obligation to divest shares, the Government must have the courage to take the option not to extend PTFI’s operations in 2021. If the sustainability of PTFI’s operations does not lead to national interests, it would be better. The Government prepares a transitional period In the next 4 (four) years to manage our own by strengthening the State-Owned Corporation.
Chairman of the PWYP Indonesia Advisory Board, Fabby Tumiwa, reminded that in addition to economic aspects, the Government must pay attention to environmental aspects and compliance with the implementation of human rights norms in the negotiation process PTFI.
“Until today, it is not clear what steps the Government takes in following up on potential losses from indications of environmental violations committed by PT. Freeport Indonesia, worth 185 trillion rupiahs, which is based on a report by the Supreme Audit Agency (BPK) on implementing the 2013-2015 PT Freeport Contract of Work”, he said.
Fabby reminded that the Government must also pay attention to the clarity of PTFI’s investment plan after the renegotiation and post-operation environmental restoration provisions. This is what is often missed in the point of negotiation. Ministry of Energy and Mineral Resources data, February 2017, shows PTFI is one of the mining companies that has not placed post-mining guarantees.
“The Government is open and transparent to the public in the negotiation process with PTFI. It must be clear who leads the negotiations, the arrangements and deadlines, and the negotiation process’s milestones. Today, the public witnesses the uncertainty of the agency overseeing the negotiation process. There should be no more statements from government officials regarding the negotiation process that conflict between one party and another”, he added.
According to Fabby, transparency must be accompanied by public participation in access to PTFI contract documents and providing input on the negotiation process. The Government must also ensure consultation, ask for consideration, and the right to declare income freely and without coercion (Free Prior Inform Consent – FPIC), especially from the Papuan people. It is crucial to prevent the temporary interests of rent-seeking groups, who take advantage of the “dark space” of the negotiation process, which ignore the public and national interests.
Then, Aryanto Nugroho, Manager of Advocacy and Network of PWYP Indonesia, urged the House of Representatives (DPR) to oversee the negotiation process. With its authority, the House of Representatives should play a more active role in ensuring that the process or outcome of negotiations between the Government and PTFI does not conflict with the Coal and Mining Law or national interests. The House of Representatives shall not just be a stamp artist approving any negotiation results between the Government and PTFI.