Aussie miners unfazed by tough Indonesian laws

Australian mining companies are flocking to Indonesia to do business despite a slew of laws in the past 12 months making the country less attractive to investors.

Australian trade and investment commissioner Julianne Merriman said this week that 45 ASX-listed mining companies now had an interest in 172 projects in Indonesia, up from 38 companies and 140 projects a year ago.

During that 12 months, the Indonesian government frightened international investors by imposing new regulations that force mining companies to sell down their ownership to 49 per cent after 10 years of production, and for all metals miners to smelt their products onshore by next year.

The laws prompted fears of a capital flight from the resource-rich country.

"But we haven't seen evidence of wholesale or even partial withdrawal by Australians," senior trade commissioner Kym Hewett said.

Australian mining companies were "pretty experienced" in dealing with governments around the world, he said, and had apparently decided, "you've just got to tough it out".

Supporting the wisdom of this approach, Indonesia's Minister for Energy and Mineral Resources, Jero Wacik, said this week he may soften the onshore smelting requirement in the face of the reality that most companies would not be ready next year.

Australia's ambassador Greg Moriarty said, "We welcome any indication of flexibility on the part of the Indonesian government".

Australian investment in Indonesia across all industries has now reached $5.5 billion and two-way trade in goods and services is worth $15 billion, up 12 per cent over the past year.

Indonesia's President Susilo Bambang Yudhoyono and Prime Minister Julia Gillard called last year for a stronger emphasis on business links between the countries.

Mr Moriarty said that in Australia's lobbying of Indonesian officials, he always emphasised regulatory certainty.

"What we say ... is that it's very important that you continue to attract investment from high-quality companies, and we also said that Australian companies are looking for greater certainty in terms of the regulatory environment, because regulatory certainty provides an environment where the right type of companies can make long-term investment decisions."

The other bugbear for businesses investing in Indonesia - the sometimes radically different interpretations of laws in the autonomous regions - was not always a disadvantage, Mr Moriarty said.

"The regional autonomy system in Indonesia is quite complex, but a number of Australian mining companies have told us that they are very positive about their engagement with certain provinces," he said.

The Australian government's annual Ozmine conference, which Mr Jero will open in Jakarta next week, has attracted 80 exhibitors, almost two-thirds of whom are new to the exhibition.