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iving mining companies four more years to build smelters (in tandem or singularly) in accordance with the 2009 Mining Law is a mistake, as is lowering export taxes. It allows them to delay ad infinitum in the short life span of changing Indonesian politics.

These companies need to realize that the old playbook of raw resource extraction and trans-shipment of ore concentrates only is a thing of the past. A recent (June 4) Bloomberg article pointed out the successful start-up of the Chinese building a smelter in Morowali, Central Sulawesi, for nickel processing by 2015. On the face, the Chinese starting this and making the required investments seem good. If the motivation is there, smelters can be built, and quickly.

However, there are incipient problems in building these smelters that directly affect hiring and skills development in Indonesia.

Further these problems will be more apparent in commissioning and start-up. The Indonesian government cannot feign ignorance to these issues: it'€™s their responsibility and the leaders after the presidential election on July 9 to take these matters into hand for Indonesia'€™s future.

Joko '€œJokowi'€ Widodo is setting the bar too low, shooting for Foxconn type jobs and whatever opportunistic investor walks through the door. Prabowo Subianto'€™s job creation program is more ambitious (Develop strong, self-sufficient, fair and prosperous economy, see point 4: '€œDevelop processing industry to add value to national economy'€), but it relies too much on wishful thinking. It'€™s not just about jobs but about eventual quality of the jobs that are in play for Indonesia'€™s success.

Neither Prabowo nor Jokowi may fully grasp the enormity of the processes in these old systems are what is at stake towards gainful employment in Indonesia'€™s vast resources. Just telling companies to '€œdo it'€ and hoping for jobs (and smelter building commitments) later doesn'€™t work, and is a reflection more to the old ways of doing things than what is actually happening in the 21st century.

First, a little smelter (downstream) economics. The Chinese need ores to keep their economy going and thus political stability. About 75 percent of Chinese companies are state-owned and their allegiance ultimately is to the state, not to quarterly profits. This pragmatic attitude has led them to assess the situation and realize that if they need to build smelters to keep nickel and other metals flowing back to China, they will do it.

Now contrast this to Freeport Indonesia, Aneka Tambang and Newmont Nusa Tenggara. These are all publicly traded companies, with full share subscriptions. They have to report to shareholders each quarter and show profits or else the share price is punished.

Building smelters requires a significant up front cash investment and shareholders want to be ensured an eventual return on that investment past the standard capital asset pricing model (CAPM), or more specifically, what the company is already earning past the usual ore concentrates it has been dealing with in the past, a very predictable business model that has lasted decades.

In short, China seems to get it though and is willing to play ball, for now. Times have indeed changed and Indonesia'€™s burgeoning, youthful population has larger needs, as predicated somewhat in the 2009 Mining Law. Nonetheless there are skills transfer problems in the law and with investors or government that are not readily apparent.

In other words, getting to successful smelting requires not only hardware (smelters) but also the software (people) to run it. Two critical issues about developing people in tandem with the 2009 Mining Law then come into play.

The first issue is turnkey. In the case of the Chinese'€™s Sulawesi nickel smelter, this smells of a turnkey project. Turnkey projects are not always apparent at first: construction and investment flow, all seem happy.

But problems ultimately arise in standards (whose), parts and equipment sourced (from where) and most importantly management of the smelter and the attendant power plant. Generally, the project lead defines the standards.

China, as the prime investor and owner in this area probably will insist on Chinese standards (for processes, safety, management, equipment, etc.) which may or may not conform to international or even Indonesian standards. For example, do parts needed in the smelter use English, metric or some other system? This is a critical issue.

Chinese standards are set in Beijing and at times considered proprietary. This means the partner may or may not be clearly apprised to what is going on, why it is happening, or how it is beholden to the controller of the technology.

In the case of Chinese invested smelters it appears that all the lead investors are Chinese state-owned company actors, such as Tsingshan steel group while the local Indonesian companies, mine owners Bintangdelapan Group, are domestic partners.

While the detailed mechanics of these deals are not important, their influence on grander Indonesian development issues, or the substance of the 2009 Mining Law, is critical if Indonesian is to get long term traction with this law. There is a requiem for Indonesia to set the tone with parts, people and processes.

The second issue is localization that cascades from the first issue. Localization is using locals to do not only the loader or truck driver jobs, but the management, procurement and high level engineering jobs as well.

These are the quality jobs, or the jobs that pay significant salaries. If the standards and methods are not apparent or not transferable and if utilization of the smelter is dependent on Chinese technology and manpower, then no real localization can occur.

The problem becomes self-reinforcing and circular: a lack of skills means higher reliance on foreign technology and manpower due to a lack of skills, etc. This means that many Indonesians involved in the project will be stuck with low paying, low responsibility jobs whilst management, technical and operations decisions will be controlled tightly by the Chinese investors.

A part solution to this is to have a dedicated skills transfer time line with the smelter investors enshrined in any project whereby locals with the skills are placed at the front of the hiring line for ensured placement.

However, if one reads the 2009 Mining Law, ore upgrading is not recognized via any education in processes but via fines and penalties for output noncompliance.

The focus of this law then is in the hardware of the smelters, but not in the software necessary to understand it. The 2009 Mining law does not reflect we live in an information age, where knowledge not tangible assets alone, define winners and losers.

In essence then, any skills transfer to develop Indonesian human resources to the next level must be attached in and to the contracts. Any political leader in Indonesia must understand this 21st century reality, and in order to get Indonesia into the worlds '€œknowledge economy'€.

This is not wishful thinking. Countries that fail to take note of this paradigm will be left by the wayside. Indonesia'€™s vast resources are more than enough to fund this knowledge initiative.

The writer is associate professor at Linton Global College (LGC) in Daejeon, the Republic of Korea.