Menakar Negosiasi Alot Pemerintah - Freeport

Summary

The ongoing dispute between the Indonesian government and Freeport Indonesia centers on the company's refusal to comply with the 2009 Minerba Law, particularly regarding divestment and smelter construction. While Freeport threatens layoffs and international arbitration, the government has proposed options including negotiations and legal adjustments. Marwan Batubara, an expert, argues that Indonesia should stand firm, as the law must be followed, and believes the country has a strong chance of winning in arbitration. He also emphasizes the public’s support for upholding the law and protecting national interests over Freeport’s demands.

Takeaways

• 😀 The conflict between the Indonesian government and Freeport Indonesia continues to intensify, with Freeport threatening to take legal action through international arbitration.
• 😀 The Indonesian government has offered three main options to resolve the dispute: reopening negotiations, revising the 2009 Mining Law, and allowing arbitration.
• 😀 The government has provided Freeport with extensions, such as a five-year period for building a smelter, but Freeport is still rejecting key terms, such as the divestment requirement.
• 😀 The government insists that all mining companies, including Freeport, must comply with the country's regulations and laws, including paying taxes, royalties, and adhering to the IUPK system.
• 😀 Marwan Batubara, the guest in the discussion, emphasizes that the Indonesian government should remain firm and enforce the law to protect the interests of the Indonesian people.
• 😀 Freeport’s refusal to comply with divestment and other regulatory terms is seen as a lack of good faith in negotiations, as they continue to push for the 1991 contract terms.
• 😀 Batubara believes that Freeport's threat to lay off employees is an attempt to manipulate the situation, and the government should resist such pressure.
• 😀 The possibility of Freeport seeking international arbitration is discussed, with Batubara expressing confidence that Indonesia would win, based on past cases where countries prevailed over corporations.
• 😀 The Indonesian government is determined to prioritize national interests and is willing to face short-term challenges, such as potential arbitration and temporary financial setbacks, for long-term gain.
• 😀 The ongoing dispute highlights broader issues around foreign ownership, the need for national resource management, and the balance between foreign investment and local interests.

Q & A

What is the main conflict between the Indonesian government and Freeport Indonesia?

The main conflict revolves around Freeport Indonesia's refusal to comply with the Indonesian government's regulations, particularly the implementation of the 2009 Minerba Law and the requirement to divest 51% of its shares to the Indonesian government. The company has threatened to take the matter to international arbitration.

What are the three options proposed by the Indonesian government to address the conflict?

The government has proposed three options: 1) Open negotiations to stabilize Freeport's investment and allow the company to continue exporting concentrates while adjusting their contract to a special mining permit. 2) Revise the 2009 Minerba Law, which would require significant time. 3) Allow Freeport to pursue arbitration if it chooses.

What is Freeport Indonesia's stance on the government's offer of negotiation?

Freeport Indonesia rejected the government's offer, particularly the requirement to convert their contract into a special mining permit (IUPK) and the demand for divesting 51% of their shares to Indonesia. The company seeks to extend its contract under the 1991 Work Contract, which does not include these stipulations.

How does Marwan Batubara view the potential for compromise between the government and Freeport?

Marwan Batubara believes that the Indonesian government should stand firm and not allow further relaxation in negotiations. He argues that Freeport's refusal to comply with the laws and their demands for extensions show a lack of goodwill and a desire for special treatment.

What does Batubara think about Freeport's threat to lay off employees?

Batubara suggests that the government should not be swayed by Freeport's threat to lay off employees. He believes that most Freeport workers are Indonesian nationals, and the government's actions are in the best interest of the country, even if the short-term consequences might seem disruptive.

What legal precedent does Batubara refer to when discussing the potential for the Indonesian government to win an arbitration case?

Batubara references a case involving Venezuela and ExxonMobil, where Venezuela won an arbitration case against Exxon after the country made changes to its laws. He argues that similar legal principles would apply in the dispute between Indonesia and Freeport.

Why does Freeport resist the government's request for share divestment?

Freeport resists share divestment because it would result in a loss of control over the majority of their operations in Indonesia. They fear losing the ability to operate freely and control major decisions, particularly with regard to financial practices such as transfer pricing.

What is the significance of the 1991 Work Contract in Freeport's position?

The 1991 Work Contract is significant to Freeport because it does not contain provisions for share divestment or the construction of smelters, which are key demands of the Indonesian government. Freeport wishes to return to the terms of this contract, which they argue are more favorable to them.

What is Batubara's opinion on Freeport's claim of not having any goodwill in negotiations?

Batubara believes that Freeport does not have any goodwill in the negotiations. He argues that Freeport is primarily interested in maintaining its benefits from operating in Indonesia, including full control of its shares and the ability to avoid complying with regulations like the smelter requirement and share divestment.

What is the potential long-term impact of the dispute between the government and Freeport on Indonesia's mining industry?

The long-term impact could include setting a precedent for how foreign companies operate under Indonesian law. If the government successfully enforces its regulations, it could strengthen the legal framework for natural resource extraction, ensuring more benefits for the country. However, there could also be economic disruption if Freeport's operations are significantly affected or if other companies perceive the Indonesian mining environment as unstable.