Eric Watkins
Senior Correspondent
LOS ANGELES, Jan. 24 -- Aimed at encouraging development of Indonesia's oil and gas sector, the 45-member US-Indonesia Business Council has recommended that the government generate a well-defined policy concerning key organizations in the country's industry.
To prevent conflicts of interests, US-IBC said prospective investors want regulations giving clear job descriptions of BP Migas, the upstream oil and gas regulatory body, as well as state-owned oil and gas company Pertamina.
The group has asked the Indonesian government to review its system of taxation on production-sharing contracts, to provide incentives for oil exploration, and to reconsider its gas price policy, which is based on a subsidy approach.
On Jan 20, the group urged the Indonesian government to conduct continuous evaluation on its policy to create conducive climate for investment because the country is in tight competition with other countries.
"We continue to observe the investment climate in Indonesia and we have done this for some time," said Robert W Haines, US-IBC president and manager of international affairs for ExxonMobil Corp.
US-IBC's recommendations came as the World Bank cut its forecast from 5.5-6%/year to 5%/year for Indonesia's economic growth this year after the slowing of inward investment and domestic consumption.
On Jan. 24, the World Bank's country director Andrew Steer told bankers in Jakarta: "Growth of investment, which has declined since the first quarter of 2004, has not improved significantly."
President Susilo Bambang Yudhoyono's government, which forecasts 6.2% growth this year, wants to attract $426 billion of investment in the next 5 years to build roads, electric power plants, and ports. But it has yet to finalize a law aimed at attracting investment.
Contact Eric Watkins at [email protected].