Indonesia Asahan Aluminium’s (Inalum) plan to take over the aluminum plant from the Japanese has been stalled again as Japan has made efforts to continue to control the plant. How will the government face this dilemma?
Tempo’s Amanda Mustika Megarani took the opportunity to interview the Coordinating Minister for Economic Affairs Hatta Rajasa, who is also the head of the advisory committee for the government’s negotiating team over the Inalum dispute, and asked him to explain the government’s strategy. Excerpts from the interview:
What is the government’s plan in dealing with Japan’s demands by bringing the case to an international arbitration body?
Let me explain the background first. Under the master agreement made previously, all of Inalum’s assets will be owned by Indonesia by November 1, 2013. However, Indonesia must pay a compensation fee to Japan.
In this case, the transfer of shares is not in the context of nationalization as the contract clearly states that 100 percent of the assets will be owned by Indonesia. Inalum is what we will use as the backbone of the downstream industry based on aluminum. The compensation to be paid will also be based on the book value (per share).
Per March 2013, the book value was US$662 million. That included inventory, asset value, power plants and smelters. However, after the Finance and Development Controller’s (BPKP) audit, the asset value was $558 million. However, Japan demanded the amount of compensation to be paid should be the total value of assets per November 1.
Initially, we refused this and they (Japan) appealed the case to an international arbitration board. However, they decided not to do this as there was no principle issue as a whole.
Weren’t you notified about the arbitration appeal?
There is actually still an opportunity to settle this through negotiations. Our lawyer said there would be no arbitration. We hope a decision will be made by next Tuesday.
What is Inalum’s current status?
The transfer has not yet occurred, but that does not cancel out the deal made in the master agreement.
When does the government plan to takeover Inalum again?
The plan before was by October 25. But at last minute, they (Japan) did not want $558 million. Governance must be accountable. So let’s just se the total audit value per November 1. I believe it won’t be that far off. The audit has not been completed yet. Later, we’ll determine whether we will use the $558 million one or the one per November 1.
There has been word that this process has been delayed because some have been trying to lobby the government. Some have even asked for a cut. What’s your response to that?
(Laughs) We’re just going to put forth the interests of the nation and make sure the process runs smoothly. In the future, it’ll just be business to business. (*)
