Spending on greenfield exploration in the country stood at US$7 million in 2004, which represented less than 0.44 percent of spending worldwide, down from 0.67 percent a year earlier, PricewaterhouseCoopers (PwC) mining partner Ray Headifen said recently.
Global exploration investment rose by 50 percent to $1.59 billion in 2004 from 1.05 billion the previous year, PwC
said in a report on the state of the country's mining industry in 2005.
"There is no doubt that Indonesia is a mineral prospective country," said Headifen
."The concern here is whether Indonesia is acting quickly enough to capture global exploration spending."
Quoting a recent study by the Fraser Institute
, the PwC report said that Indonesia ranks sixth worldwide in terms of mineral prospectivity but third last on investment conditions with a score of 12 out of 100.
The new mining bill, which is aimed at replacing the contract of work system with licenses issued by local administrations, would further deter investors, said Headifen
A contract of work sets out the terms, as well as the tax and royalty rates, upfront, while a license would be at the mercy of changing rules, rendering it difficult to make financial and profitability predictions.
"(The proposed change) hasn't been well received by foreign investors," said Headifen