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US Companies Promise 2 Billion $ Investment In Indonesia


American companies this week made a commitment to invest more in Indonesia provided that the government can guarantee legal certainty and security.During a meeting with President Megawati Soekarnoputri 10 American companies, mainly oil and gas enterprises, made a commitment for new investment totaling US$2 billion, according to presidential economic adviser Frans Seda. Seda, however, declined to elaborate. Nonetheless, executives of Conoco Oil and Freeport Mc Moran, both with strong interests in Indonesia, expressed their intention to increase their investment in the country. Conoco senior vice president J. Michael Stinson said that his company, with interests in the West Natuna gas field in Riau, intended to join the bidding for 17 new oil and gas blocks offered by the government during the meeting.

Freeport chairman and chief executive officer James R. Moffet, said that the company had invested a total of $6 billion in its giant copper and gold mines in Irian Jaya alone and was prepared to invest more in Indonesia´s eastern-most province. Both Stinson and Moffet, however, spoke about the importance of the Indonesian government having stable and predictable regulations. They mentioned the complications involved in the implementation of the new autonomy law, tax regulations as well as labor laws and regulations. "Indonesia will be one of the best places (for companies) to put money if you have a stable and predictable tax environment, law respecting human resources and workers. Then it will be conducive for foreign investment," said Stinson. The government, Stinson added, had also to make sure that all bureaucratic processes were rational and if possible they be pooled under one roof to make it more convenient for investors to do business in the country. "We have to have all those things. Otherwise, investors will be reluctant to come to the country," he remarked. James R. Moffet also spoke about regional autonomy, especially the special autonomy bill for Irian Jaya currently being deliberated. Moffet, nevertheless, expressed Freeport´s readiness to work under the planned special autonomy law, that would give much of the revenue from mineral exploitation to the province. "The regional autonomy law is like other laws. We will work with it," Moffet said. Meanwhile, Texaco Inc. chairman Glenn F. Tilton, who also attended the meeting with the President, brought up the importance of bringing uniformity in investment regulations that seemed to be negated by the autonomy law. He suggested that the current drafting of the new investment bill focus on creating uniformity in investment, especially to deal with possible confusion in the implementation of the autonomy law. "We appreciate the efforts of the Indonesian government to bring uniformity for investment opportunity in Indonesia ... We will avail of what Indonesia has to offer," Tilton said after the meeting. ExxonMobil Oil Corp. executive vice president Harry J. Longwell highlighted the importance of security being guaranteed, especially in restive areas such as Aceh, its center of operations in Indonesia.

He noted that ExxonMobil suspended its operation for four months due to security reasons and it would take some time to resume full operations in Aceh. "We have secured the operation at this time and we have an ongoing understanding that security is the responsibility of the government and they are handling it," Longwell said after meeting Megawati. Speaking at the opening of the Houston Energy Dialog on Sunday, Megawati stressed once again the government´s commitment to protect foreign investment and at the same time underlined the importance of the need for companies to work with local people to improve their welfare. Megawati invited oil and gas companies to invest in Indonesia, promising a more stable and conducive investment climate under her administration. She noted that the House of Representatives had just passed the oil and gas bill into law, giving more room to private investors to play a greater role. "I am not here to make empty promises. But I can assure you of my determination ... What I can promise you is very modest: Do come to Indonesia and we will warmly welcome you," she ended her speech.

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