JAKARTA – A Japanese consortium and the Indonesian government has formally terminated a contract to run an aluminum production company, which was effectively nationalized by Jakarta around two months ago.
The government is formally taking over the assets of PT Indonesia Asahan Aluminium, or Inalum, following months of tough negotiations.
“To come to today’s event, we have marked history through good and bad times in our PT Indonesia Asahan Aluminum since its establishment,” Industry Minister Mohamad Suleman Hidayat said Monday in a speech after the agreement was signed.
“In its journey, the company has not only become the anchor of a national manufacturing industry but also one of the biggest aluminum smelters in Southeast Asia,” Hidayat said.
During the last negotiations, held in Tokyo in November, Indonesia agreed to pay $556.7 million to shareholders of Nippon Asahan Aluminum, a consortium of companies including Sumitomo Chemical Co., Sumitomo Corp. and Mitsubishi Corp. for the value of the Japanese shares in Inalum.
Before the agreement was reached, shareholders had planned to bring the case to the Singapore-based International Center for Settlement of Investment Disputes after both sides disagreed over the value of the shares.
Indonesia had insisted the value should be $424 million based on book value before asset revaluations in 1997 and 1998, but the consortium claimed its shares were worth $626 million, including the value after asset revaluations.
Jakarta had also sought to have the amount audited by public accountants named by both sides, but under the agreement inked Monday, the amount is not subject to such an audit.
Expressing his gratitude to the Indonesian government for the 30 years of cooperation, NAA President Yoshihiko Okamoto said Inalum has supported Japan’s industry and “has been regarded as a symbol of economic collaboration” of both countries.
State Enterprises Minister Dahlan Iskan lauded the fact that success in the negotiations could be achieved without “any significant turmoil, without arbiter and without damaging the relationship” between foreign investors and Indonesia, which badly needs investment.
From Japan, he said, Indonesians can also learn how to maintain Inalum’s 30-year-old assets, which are still in good condition and performing well.
Inalum was 41.12 percent owned by the Indonesian government and 58.88 percent by NAA.