Thursday, April 01, 2004

Mining law vs decentralization

Just got back from Denver, CO, preceded by a short reroute to Washington D.C. Met with collegueas: Mbak Ani (IMF), Mbak Lala (LPEM), Mas Iben (Embassy), Mas Yossi (WB), Sjamsu (Georgetown Univ.). Started working on a project about Indonesian mining industry, a collaboration between the Univ. of Indonesia and Colorado School of Mines. A little worried with too many political interests involved: mining associations, Department of Energy and Mines, Department of Forestry, and the Ministry of Environment. The main objective of the project is to draft a new mining law for Indonesia. We have produced a world-class investment law in 1967. Many countries copied it. We had a two-tier contract law that were adopted by Ghana and other countries. But things have changed rapidly. Other countries have reformed their law and regulations. We haven't. Now that everybody in Indonesia talks about decentralization, there is an urgent need to adjust the law. Main problem is that there is a huge hole between the central government and the local, independent bodies ("bupati"). How do we deal with mining contracts subject to this decentralization euphoria? This is a big issue. And politically sensitive. An international, independent institution would be ideal for doing the assessment. But the IMF and the World Bank have bad reputations back home. That leaves the universities and independent research centers. And that's how the LPEM was involved.

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