The government should be giving all it has got when it comes to purchasing the seven-percent divested shares of Newmont Nusa Tenggara, because to allow the gold mine's shares to fall into the hands of the local government is tantamount to give up on the state's interests. Moreover, the local government certainly does not have the money to pay for the Rp2.3 trillion worth of shares, thus it seems as if the local government is being used by private companies.
The central government's defeat is shown by the Coordinating Minister for the Economy, Hatta Rajasa, who called for Newmont's shares to be granted to the local government. Only if they cannot afford it, Hatta said, the state-owned enterprises would take over. But the latter option seems unlikely to happen. It can be guaranteed that the provincial government of West Nusa Tenggara will buy the shares albeit not using their own money.
The Newmont share dilemma began when the company was mandated to divest some of its shares to reduce foreign ownership to just 49 percent. Today, gold mine operator Nusa Tenggara Partnership B.V.--a joint partnership between Newmont and Japan's Sumitomo Corp., still controls 56 percent of the shares. The remaining shares are owned by national companies; Pukuafu Indah with 17.8 percent, Indonesia Masbaga Investama with 2.2 percent and Multi Daerah Bersaing (MDB) with 24 percent. MDB is a joint venture between the local government and Bakrie Group's subsidiary, Multicapital.
In the era of Finance Minister Agus Martowardojo, the central government decided to buy Newmont's shares. But this attempt was thwarted by the House of Representatives (DPR). The conflict between Agus and DPR even went to the Constitutional Court, which ended with Agus' defeat.
The Constitutional Court decided that the shares purchase must be authorized by DPR. From here, it is easy to see what interests are behind the dispute. In contrast to Agus' will to prioritize state interests, the politicians in Senayan opted to give the shares to the "local government".
How Hatta is now acting towards the seven-percent problem has further demonstrated the government's failure to buy Newmont's shares. The same mistakes will be repeated. In Newmont's previous divestment, the local government was allowed to buy the stake for almost nothing. On paper, the province owned a stake through MDB. But the local government's position is weak because they only have 25 percent stake, whilst the majority of the shares (75 percent) are owned by Bakrie Group.
When MDB purchased 24 percent stake in Newmont, MDB used a high-interest debt from Bumi Resources--another one of Bakrie Group's companies. Later, MDB mortgaged its stake, and practically spent the dividends--which should have been enjoyed by the people of Lombok--to repay its debt.
The government should try harder in lobbying the House to allow SOEs to buy Newmont shares--just as SOE Minister Dahlan Iskan hopes for. If the local government wants to increase the portion of its shares, it could be done by partnering with an SOE, not with the privates.
Hatta's defeatism will only make the country lose the opportunity to participate in controlling the gold mine--an asset that should be utilized for people's welfare. (*)
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