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Patience is a virtue: Problems of regulatory governance in the Indonesian mining sector

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  • OCallaghan, Terry

Abstract

Mining investment in Indonesia has been at a standstill for a decade. Clearly. international mining companies regard the country as a high risk destination for capital. Yet Indonesia is one of the most highly mineralised countries in the world and has expressed a desire to increase investment in the sector in the coming years. As a first step in this direction the government has introduced a new mineral and coal mining law to replace the highly regarded Contract of Work system. The government argues that this new law will reinvigorate mining investment in the country. This paper suggests that the new mining law will do little to improve the situation. Indeed, it is unlikely that Indonesia will become a preferred destination for mining investment in the foreseeable future. Poor regulatory architecture, endemic corruption, and a lack of institutional capacity continue to be of concern to investors.

Suggested Citation

  • OCallaghan, Terry, 2010. "Patience is a virtue: Problems of regulatory governance in the Indonesian mining sector," Resources Policy, Elsevier, vol. 35(3), pages 218-225, September.
  • Handle: RePEc:eee:jrpoli:v:35:y:2010:i:3:p:218-225
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    References listed on IDEAS

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    1. Humphreys, David, 2010. "The great metals boom: A retrospective," Resources Policy, Elsevier, vol. 35(1), pages 1-13, March.
    2. Levy, Brian & Spiller, Pablo T, 1994. "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation," Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(2), pages 201-246, October.
    3. World Bank, 2003. "Combating Corruption in Indonesia : Enhancing Accountability for Development," World Bank Other Operational Studies 14652, The World Bank.
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