Indonesia's Megawati eyes tougher line on foreign firms

Indonesia's Megawati eyes tougher line on foreign firms

Fri May 22, 2009 8:32am EDT
By Sunanda Creagh

JAKARTA, May 22 (Reuters) - Indonesian opposition leader and presidential candidate Megawati Sukarnoputri said on Friday she would take a tougher stance in contract negotiations with foreign resource firms if elected in July.

Megawati, is a former president who heads the PDI-P party and is standing against incumbent Susilo Bambang Yudhoyono and Vice President Jusuf Kalla in the July 8 presidential vote, which is likely to focus on economic issues.

"We have a real weakness in the way we write our contracts. We are too polite," she told a meeting of business leaders, citing as an example the huge Grasberg copper mine run by PT Freeport Indonesia, unit of U.S. firm Freeport McMoRan Copper & Gold (FCX.N) in Papua, also known as Irian Jaya.

"I went to Freeport and I saw the way the earth is being exploited but the local Irian people are kept down," she said.

The mine has been a frequent source of controversy over its environmental impact and the share of revenue going to Papuans.

Indonesia is rich in mineral and energy reserves and has a number of global resource firms operating in the country, although the deals are often politically sensitive despite an urgent need for more foreign investment.

Yudhoyono is currently well ahead in opinion polls for the election. Under his administration, Southeast Asia's biggest economy has had its strongest growth in a more than a decade.

The government has forecast growth will slow to 4-4.5 percent this year, against 6.1 percent growth last year, but still higher than many other Asian countries.

Yudhoyono said on Wednesday that if he was elected for a second term his government could improve the investment climate to lift economic growth to 7 percent by 2014, while Kalla said an administration under him could achieve 8 percent growth.

Megawati declined to give a specific growth number that she could achieve, but said double-digit growth was not impossible.

Yudhoyono's approval rating in a recent poll of 67 percent, against 12 percent for Megawati and 2 percent for Kalla, makes it almost certain he will win a second term, bar some unexpected blow.[ID:nIDPRESPOL] (Click on [ID:nJAK13326] for factbox on presidential pairings) (Additional reporting by Dicky Kristanto, Editing by Ed Davies)




Thomson Reuters 2009 All rights reserved