A prominent Indonesian businessman has warned foreign miners of the perils of investing in his own country over the next two years due to new laws which curb overseas ownership.
The Australian reports that Noke Kiroyan, a veteran of the Indonesian mining industry who previously headed Rio Tinto (ASX:RIO) and Newmont Mining's (NYSE:NEM) operations in the archipelago nation, has said rampant nationalism was making mining investment by foreigners far more risky, pointing to the ambiguity of new laws which force overseas companies to cede majority ownership to local businesses.
Kiroyan, who made the remarks during a visit to the Western Australian capital of Perth, says the new laws are unlikely to be changed until the next round of elections in 2014 when incumbent President Susilo Bambang will resign from office.
"The only realistic option is to wait until the next administration because it is this current administration that has changed it," said Kiroyan.
The new laws stipulate that foreign miners must cede 51% of equity in joint ventures to the local government or Indonesian private companies five years after production commences.
Indonesia's reputation as a foreign investment has worsened considerably this year, with a wave of resource nationalism leading the government to forcibly seize majority stakes in mining sector joint ventures.