By Ben Otto
JAKARTA, Indonesia--Indonesia's new economics minister said the
government will take steps to create a more welcoming climate for
investors by revamping contracts with oil-and-gas producers and
reducing the legal uncertainty that has rocked companies such as
Chevron Corp.
In the past, "we have said to investors, 'Come to Indonesia,'
but they come here and their hands are tied," Coordinating Minister
for Economic Affairs Sofyan Djalil told The Wall Street Journal in
an interview. "By implementing good policy, we believe we can
attract more investors to Indonesia."
Southeast Asia's largest economy could also further adjust its
policy of subsidizing fuel prices this month, said Mr. Djalil, who
oversees policy coordination among key economic ministries in
Indonesia, including the departments of finance, trade, industry
and state-owned enterprises.
President Joko Widodo's government aims to reduce energy
subsidies and increase spending on the roads, ports and dams
Indonesia needs to attract investment and boost its $900 billion
economy. Last month, Indonesia raised fuel prices more than 30%,
freeing up more than $8 billion for such spending.
"We are quite fortunate," Mr. Djalil said. "The price of
international oil actually is decreasing, and hopefully we can
adjust a policy by the end of this year or by early next year," he
said, declining to offer details.
Seven weeks into his job, Mr. Djalil said the government is
working to solve problems holding up major projects. He said a new
land-acquisition law coming into force in January would help clear
the way for a long-delayed $4 billion dollar power plant planned by
Indonesian thermal-coal producer Adaro Energy and Japanese
investors.
He also said the former OPEC member will soon revise its
decades-old structure of oil and gas production-sharing contracts,
responding to energy companies' complaints that the current
contracts don't reflect the higher costs of a new era of riskier
deep-water and remote-region operations.
"We have so much potential in our waters," he said. "But we have
to change the [production-sharing contracts] scheme, because the
scheme is very archaic already."
Oil production in Indonesia fell below 800,000 barrels a day
this year for the first time in decades, after years of slumping
exploration activity.
Chevron recently postponed a $12 billion deep-water gas project
indefinitely after the Indonesian government missed the company's
deadlines for greenlighting the project, among other issues.
"The Chevron case is very unfortunate for the country," Mr.
Djalil said. "We lost an opportunity [because] unfortunately no one
made a decision."
Another priority for Mr. Djalil is the recent wave of criminal
cases brought by the Attorney General's Office against companies
such as Chevron, Indosat and Merpati Nusantara Airlines. Employees
and executives of these companies have been sentenced to prison on
corruption charges in recent years.
Mr. Djalil said he is taking the legal issues facing companies
"very personally," and he is working to resolve the cases.
"We want to send a message that kind of problem will never
happen in the future," he said, referring to the criminal cases.
However, in a recent interview with The Wall Street Journal, Mr.
Widodo said he wasn't concerned about foreign companies' fears
related to the Attorney General's Office.
Mr. Djalil said the government was taking other actions to boost
the economy, such as studying ways to reduce the number of permits
businesses need to operate and ramping up tax collection. Indonesia
is betting on these moves to help it meet its goal of economic
growth of more than 8% in the final two years of Mr. Widodo's term,
making the five-year average of his presidency around 7%.
Mr. Djalil also said Indonesia could create a sovereign-wealth
fund along the lines of Singapore's Temasek Holdings Pte. Ltd. or
Malaysia's Khazanah Nasional Bhd., but such a move wouldn't occur
for at least two years.
Write to Ben Otto at ben.otto@wsj.com
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