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Jakarta Post
The Jakarta Post
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BKPM to put stalled projects back on table

  • Raras Cahyafitri

    The Jakarta Post

Jakarta | Sat, January 31, 2015 | 11:37 am

The Investment Coordinating Board (BKPM) is aiming to settle a number of projects in Papua and West Papua that have been stalled, mostly because of land disputes and infrastructure problems, as part of an attempt to boost investments in the eastern part of the country.

BKPM head Franky Sibarani said on Friday that his office was currently working to accelerate the realization of investments with a combined value of Rp 113 trillion (US$8.8 billion) from 10 companies that were currently being hampered by several problems.

'€œThe planned investments cover various sectors, including marine and fisheries, plantation, cement and mining. Six of the firms are connected to foreign investments in the marine sector,'€ Franky said.

He revealed that a cement firm was set to build a plant in Papua, but a dispute with a local community on indigenous land has hampered its development.

As for the six companies planning to invest in the fisheries sector, the investment was bogged down because the permits had been annulled by the Maritime Affairs and Fisheries Ministry.

Franky said the BKPM would discuss the matter with the Maritime Affairs and Fisheries Ministry to settle the issue.

In terms of companies planning to invest in the plantation sector, the BKPM is seeking solution to encourage keeping the investments intact, although a previous plan to develop the Merauke Integrated Food and Energy Estate (MIFEE) in West Papua is currently under review. The MIFEE development has been rejected by local residents. The option of developing the plantation in another area has been taken by some investors and will be supported by the BKPM, according to Franky.

Out of the total Rp 113 trillion intended for investment, nine firms had planned to invest up to Rp 13.8 trillion. Meanwhile, the biggest investment of around Rp 99 trillion is expected to come from activities related to copper miner PT Freeport Indonesia and a copper smelter planned by PT Nusantara Smelting Corporation.

Freeport Indonesia is currently planning to develop an underground mine in the Grasberg area.

Meanwhile, Nusantara Smelting signed in 2013 an agreement with copper miner PT Newmont Nusa Tenggara (NNT) in which the latter agreed to supply copper concentrate to the former'€™s planned smelter. Last year, Nusantara Smelting showed disappointment toward Newmont Nusa Tenggara when the copper miner said it would join Freeport in developing a smelter. The decision was expected to make Nusantara Smelting'€™s smelter lack a supply of copper concentrate.

There has been no progress toward an agreement between Nusantara Smelting and Newmont Nusa Tenggara. Nusantara Smelting director Juangga Mangasi did not immediately reply to calls, or to a text message seeking confirmation on whether the company wanted to build the smelter in Papua with Freeport.

Investments in Papua and West Papua province have been sluggish in past years, although the area is rich in natural resources and several estates have been planned.

According to figures from the BKPM, foreign investment in Papua province amounted to $1.26 billion in 2014, down from $2.35 billion a year earlier. Meanwhile, investments by domestic players was worth Rp 249.9 billion last year, a drop from Rp 584.25 billion in 2013.

West Papua province also experienced a similar drop in domestic investments to Rp 100.1 billion last year from Rp 303.95 billion in 2013. Meanwhile, West Papua recorded $153.3 million in foreign investments in 2014, a significant rise from $54.16 million.

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