Total Wants Exemption From Indonesia's Repatriation Restriction
JAKARTA - Total SA said Tuesday it should be exempt from an Indonesia central bank restriction on sending profits back home, saying the regulation threatens its business operations and may conflict with the country's oil and gas laws.
The repatriation restriction had been imposed on all but oil-and-gas companies last year, underscoring the importance the country holds in developing its high-stakes oil and gas industry with foreign help. In addition to requiring export profits to be at least temporarily put in local banks, the rule also applies to foreign loan withdrawals and overseas bond issues.
But this year, the rule was expanded to the oil and gas industry, prompting the objection by Total, one of the biggest producers of liquefied natural gas in Indonesia.
"We objected to the idea of placing the proceeds [into] national banks," said Kristanto Hartadi, Total's local spokesman.
The spokesman didn't outline any steps the company is weighing over the regulation nor explain the timing of raising the concern.
Mr. Hartadi said companies like Total, which operate under a production-sharing contract system with the Indonesian government--meaning they bear financial risks all the way from exploration to production--should not be treated the same as oil and gas exporters, or other exporters.
"It's supposed to be up to us on where we want to put our money," he said, adding, "Bank Indonesia's policy might be conflictive with oil and gas law."
The central bank responded that it intentionally built in latitude to its regulation for all companies, by, for example, not requiring a minimum holding period for proceeds in local banks or forcing conversion to local currency.
"Bank Indonesia [spoke] with various parties before drafting the regulation... It's not a problem if they want to take their money out immediately afterwards," said central bank spokesman Difi Johansyah.
Indonesia, which left the Organization of the Petroleum Exporting Countries in 2008 after becoming a net oil importer earlier in the decade, is keen to boost its production. Crude output averaged 865,000 barrels a day last year, falling short of a 930,000-barrel target and well below a peak of 1.6 million barrels recorded in 1965 and 1976.
Global companies have increasingly invested in Southeast Asia's biggest economy, attracted by the rising wealth of the country's middle class. But they complain that Indonesian policy makers impose oftentimes confusing policies and overlapping regulations on foreign businesses, causing them major headaches.
In one example the companies point to, Indonesia's oil and gas regulator early this year didn't approve working permit renewal of the local head of Exxon Mobil Corp., saying he wasn't cooperative in efforts to speed up oil production.
Businesses fear such uncertainties. And foreign companies say they fear they may face greater uncertainties due to some anti-foreigner sentiment in the run-up to the 2014 parliamentary and presidential elections.
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