Spinning Foreign Direct Investment into Globalization Gold: Indonesian Policy Proposals

by Christina Kurre

Composed of over 17,000 islands in Southeast Asia and a diverse population, Indonesia’s biodiverse and resource-rich environment positions it to experience environmental harms as a result of foreign intervention and cycles of poverty. Empowering the Indonesian people and government to take control and sustainably utilize their environment is essential for domestically prosperous policies. In the 1600s, the Dutch colonized Indonesia, exploiting Indonesian resources, land, and people to promote the sugar industry for profit in the Netherlands. With an intense focus on sugar production, the Indonesian economy was ill prepared for diversification because its other industries were not as advanced. Following a brief Japanese occupation, Indonesia gained independence in 1945. Weak and tumultuous governments brought Indonesia to the 1960s, when President Suharto started his authoritarian and centralized rule, lasting until 1998. During the latter half of the 20th century, the Indonesian economy grew rapidly. During the Asian Financial Crisis in 1997, poverty grew from 17.47% in 1996 to 24.2% in 1998 (Hill 2021). In 1998, President Suharto resigned as the Asian Financial Crisis battered Indonesia. The crisis promoted political instability, widespread poverty, and large-scale unemployment. The crisis exacerbated by an outflow of foreign direct investment from Indonesia. Foreign direct investment net inflows fell as a portion of Indonesian gross domestic product from the onset of the crisis in 1997 to 2000 when it began recovering (“Foreign Direct Investment” 2020). Following the Asian Financial Crisis recovery, foreign direct investments in Indonesia have grown dramatically. Recognizing how crucial foreign investment is to the economy, Indonesia started to actively cultivate an environment that attracts foreign investment. President Widodo began an infrastructure push to ideally attract even more foreign investment (Otto 2015). Currently, foreign investment represents approximately half of all total investment in Indonesia (Christina and Suroyo 2022). Foreign direct investment heavily supports Indonesian exports, productivity, employment, and more, which has supported dramatic economic growth (OECD 2020).

In 1967, two years before Indonesia formally annexed West Papua, the Indonesian government granted what would become Freeport McMoRan the right to extract mineral wealth at the Grasberg mine site in West Papua (Schulman 2016). In the five decades since Freeport began operations, Freeport has extracted 528 billion ounces of copper and 53 million ounces of gold and the environment within and surrounding the mine displays this significant undertaking (“Grasberg Open Pit Copper Mine” 2020). A report by Indonesia’s Supreme Audit Agency in 2017 found that the Grasberg mine caused $13.25 billion worth of environmental damage, mostly from tailings that extended beyond the agreed upon limits (Christina Munthe 2018). Two years earlier, the Indonesian Ministry of Environment and Forestry reprimanded Freeport for activities beyond the scope of the environmental permit granted (PT. LAPI ITB 2017). Freeport

also released approximately three billion tons of tailings over the life of the mine, violating Indonesian law (Cardiff et al. 2012). In 2012, President Yudhoyono signed a law that required that foreign owned mines sell down their ownership stakes, so the mines are at least 51% domestically owned by their tenth year of production (Thaher and Chatterjee 2012). This attempt at natural resource sovereignty was a key contributor to Freeport renegotiating their contracts in 2019. In 2019, PT Indonesia Asahan Aluminum (Inalum) acquired a 41.2% ownership stake, the Papuan government obtained a 10% stake, and Freeport maintained a 48.8% stake. When the Indonesian government bought out Freeport’s stake through the government owned Inalum, they became financially and legally responsible for the environmental damage (Gokkon 2019). Freeport is just the most egregious of the foreign owned mines in terms of environmental and human rights violations. Indonesia’s Constitution recognizes the human right to the environment, making Freeport’s blatant disregard for the environment a human rights issue as well. Legally, all companies are expected to restore mining sites, but many mining companies fail to follow through. The thousands of open mining pits left by the companies are a noticeable marking of companies’ failures. Between 2014 and 2020, one hundred and sixty-eight people have died, mostly children, from falling into these abandoned mining pits. Authorities neglect the legal non-compliance, which further enables environmental harm from mining (Jong 2021a). The first area for policy changes is in foreign mine environmental management. Indonesia should renegotiate the terms of foreign owned mines, such as the Grasberg Gold and Copper Mine, to require that the mining companies provide clear and scientifically substantiated plans for environmental clean-up before, during, and after the life of the mine, as well as evidence of the financial resources to fund the plans. Indonesia has vast gold, tin, bauxite, nickel, and copper reserves as well as other key resources. Many of these resources are being developed by foreign companies due to the intense initial capital requirements. The initial exploration permits for mines do not require any environmental assessments, but the production permits do require an AMDAL– an environmental permit. Once companies have invested the necessary resources to explore the possible mine, they are likely to be highly motivated to mine in that area. This strong desire to focus on the monetary benefits of their investment could result in overlooking the environmental consequences beyond the AMDAL requirements. Requiring companies to undertake extensive environmental planning will force them to take the time to consider and mitigate the environmental fallout from their mining. This additional planning will be added to the AMDAL requirements and will focus on the consequences. This proposed permit requirement differs from the current AMDAL requirements in one key way: solutions for the environmental harm. The AMDAL focuses on the potential for significant impacts of the activity, not on the ramifications, mitigations, or adaptation, which are vital when computing the cost benefit analysis of a mine. The restoration will take place throughout the mining process to ensure that lasting damage is not done as a result of waiting until the end of the mine to deal with the environmental issues. This is especially important because mines can have extremely long life spans, like the Grasberg mine, which has been producing for almost fifty years. Part of this assessment requires evidence of the financial capacity to complete the environmental clean-up. This is key because part of mining should include restoration. Environmental clean-up is often quite expensive and it is important for mining companies to prove that they can take on this burden before they damage the environment. Companies will not

be allowed to base their entire financial capacity evidence on the success of the mine in the case that it is not as fruitful as anticipated. Putting the financial and logistical burden on the foreign companies forces them to take on the cost of their actions that would otherwise become negative externalities placed on the future domestic owners. Previously, many of these companies left their environmental damages to be endured by the communities, and this policy would require companies to internalize most, if not all of the externality. These new AMDAL requirements will be applied to all new mines and all permit renewals. Previously permitted mines will be strongly encouraged to create these plans as well. Should companies with valid permits decide to not develop these plans, they will be taxed an additional amount based on their production levels and the revenue earned from this tax will go into a fund to support the environmental clean-up efforts of that company. Ideally this two-pronged approach to monitoring, both before and after will ensure compliance with environmental laws. Requiring more oversight initially, especially while the company seeks permission, will encourage companies to follow through because they created their own responsibilities and provided the plans to the relevant authorities. This policy will also hopefully reduce the number of abandoned mining pits. An Indonesian mining advocacy network identified over 3,000 abandoned mining pits (Jong 2021a). While not all of these pits can be attributed to foreign mining companies, preventing the abandonment of these mining pits and thereby the deaths of people will be beneficial no matter the scale. This policy focuses predominantly on foreign firms because they produce an externality and will not have to see the repercussions. Foreign firms will not feel the decline in the Indonesian economy due to environmental degradation. They also can easily remove themselves from the country and economy when they see fit, which does not benefit the Indonesian people. Ultimately, this policy proposal will be of incredible benefit to the Indonesian government and people by reducing their liability for the actions of foreign companies in Indonesia. But there are still several risks. Firstly, because mining companies have to prove they can afford the necessary clean-up prior to any mine profits, they will be unlikely to elect to undertake expensive or more effective environmental clean-up that they may only be able to afford afterwards. This could be an issue because it could lead to companies not cleaning up all of the mining impacts, but rather doing as much of the work as they are required, but not more. The planning documents required for the AMDAL will be the minimum the companies are required to do for environmental clean-up, so the companies could do more, but that is unlikely if it is more expensive. Another minor concern is foreign firms may no longer invest in Indonesian mines. This is a smaller concern because mining is an industry that cannot move locations, either the resource is there or it isn't. Indonesia has many resources, and they will remain located in Indonesia regardless of the regulation status. So long as there is a demand for mineral resources, there will be companies vying for the mining rights. This policy will also be challenging to apply to existing mines and mining permits, hence the addition of the tax on companies without plans. This will hopefully entice companies to submit their plans, without punishing them too much for rules that came after their permits were granted. Overall, this addition to the AMDAL process will force companies to also reconsider their actions before they take them. In lieu of cost cutting methods that are environmentally

hazardous, companies may opt to spend more on their mines to reduce the initial environmental harm and save on the eventual clean up. This long-term mindset will force companies to initially confront the direct harms that they cause.

Artisanal and small-scale gold mining (ASGM) supports over one million people’s livelihoods in Indonesia, whether they produce gold formally or informally (“Indonesia: Phasing” n.d.). Informal gold miners mine for gold without proper permits. Due to the somewhat illicit nature of the industry, specific measurements are not available, but it is estimated that the ASGM industry produces between fifty and one hundred tons of gold annually, which is worth three to five billion dollars (Gold ISMIA 2020). ASGM miners can earn up to six million dollars a month (Paddock and Dean 2019). Informal mining can provide a temporary income or a permanent income for people in need without much training. The complicated and expensive logistics associated with acquiring a gold mining permit inhibit informal gold miners from acquiring permits in many instances. Without a permit, the miners lack official oversight. One of the easiest gold mining methods relies on mercury to separate the gold from ore. To isolate gold, the miner put rocks and ore in a barrel and pulverize the mixture with heavy bars. The miner adds liquid mercury to the barrel and then the miner separates the mercury-gold amalgam from the other rocks. Finally, the mercury-gold amalgam will be heated to vaporize the mercury and leave gold (Esdaile and Chalker 2018). Using mercury in gold mining requires low start-up costs, which allows poor individuals to make money quickly without much investment. But mercury does have significant long-term costs. Mercury creates socio-economic dependency rapidly, making it an agent of poverty that exacerbates inequality. Many ASGM miners initially start using mercury as a way to mine gold and escape poverty, but mercury-related health consequences quickly create more medical bills for the individual to rely more heavily on mercury to pay off (Spiegel et al. 2018). As a neurotoxin, an individual may face mental disturbances, neuromuscular changes, nerve damage, emotional changes, muscle weakness, and more after prolonged exposure to mercury (US EPA 2022). Mercury is extraordinarily dangerous because the human body cannot expel it, allowing mercury to bioaccumulate (Rice et al. 2014). About half a million people have mercury poisoning in Indonesia, many from gold mines that use mercury (Paddock 2019). In Indonesia, the ASGM sector released approximately 195 tons of mercury (Gold ISMIA 2020). Once released into the environment as a solid, liquid, or vapor, mercury can settle and become methylmercury (NHDES 2019). Methylmercury can enter the food chain and can travel vast distances, especially amidst food chain globalization. As mercury bioaccumulates in the food chain, it will slowly poison the people who consume the mercury contaminated food. Miners are at least somewhat aware of the impacts mercury has on them and the environment, but the market does not correct the mercury externality (Gold ISMIA 2020). The damage caused by mercury is not accounted for in the price of gold, creating a negative externality. There is both a time and distance element to the people who feel the burden of mercury use and while some of the miners do feel the externality of their mining, others do too. The government has attempted to transition formal and informal ASGM miners from mercury to more sustainable methods on several occasions, but the miners are especially skeptical towards government run projects. The government has gone so far to introduce two

alternative gold-processing technologies to hopefully reduce or eliminate mercury use in gold processing. The government has also proposed and run a certification program, but it has been challenging to get miners to meet all the necessary environmental requirements (Gold ISMIA 2020). For fear that they will be caught not adhering to all environmental regulations, few miners actually try to get certified. The poorly defined and unenforced property rights in Indonesia’s gold mining hinder regulation attempts. ASGM miners are located across Indonesia, but many are illegally occupying land that they do not have the proper permits to be on. Some of the informal miners also occupy land on mining concessions, maintained by large-scale mines. Most of the 7,000 miners in West Sumbawa are based on a mining concession owned by Amman Minerals, an Indonesian mining subsidiary of American owned Newmont. This mining concession even had a permanent mining community within it for informal miners, highlighting how open informal miners are about their location on mining concessions (Paddock 2019). The insecure property rights exacerbate the mercury pollution because miners have high discount rates because they have little stake in the land they pollute. When small-scale gold miners lack secure, formally recognized access to resource rights and are treated as criminals by companies and government agents, the risk of mercury pollution increases (Spiegel et al. 2018). The second policy centers ASGM informal miners to decrease poverty, reduce mercury pollution, and support domestic industries. Indonesia should require foreign owned gold mining concessions to allocate 10% of the concession for artisanal and small-scale gold miners to mine on. The gold produced by ASGM miners will be certified and partially-subsidized by the government, so long as they do not use mercury and demonstrate attempts at following other environmental regulations. To legitimize and formalize the artisanal and small-scale gold mine industry foreign-owned gold mines will be required to offer a small percentage of their land to small-scale gold miners. Local miners will be offered the opportunity to miner in the small-scale mining portion of the concession, in order to demonstrate a government commitment to supporting local miners as well as foreign companies. The number of small-scale miners offered permits will depend on the size of the land, but it will be done in a way to maximize the number of permits and mine efficiency. Miners with permits for this area will be subject to government monitoring. The goal of the monitoring will be to promote safe mining practices, not to punish miners for not being able to meet environmental requirements. However, mercury use is the only environmental regulation that the miners must follow. Any evidence of mercury use will result in immediate revocation of the permit. Following monitoring, the government will work with the miners to support them in their pursuit to follow environmental regulations. Miners with a certification will be eligible for a subsidy from the government. The government will partially subsidize gold prices so that gold with this certification will be cheaper than the market price. The subsidy highlights government commitment to promoting local miners.

This policy will legitimize much of the gold mining industry, which will hopefully stimulate the local economy further. The gold mining industry is one of the main contributors to some local Indonesian economies. The formalization will hopefully reduce poverty and inequality by giving miners legal employment with government support.

Ideally, the miners will also be more efficient and profitable because they will reduce negative externality producing techniques and have more efficient, permanent settlements. This will hopefully increase gold production for these miners, which will contribute to the local economy. In West Sumbawa, the legal gold mining sectors followed by illegal sectors are the largest economic contributors (Paddock 2019). Increasing efficiency will add more economic contributions for the benefit of the Regencies. This policy will increase the tax base. By allocating permits for informal miners, the newly formal miners will join the tax base because their income will be counted as taxable income. The formal miners will have to pay taxes, which will support the development of public resources. The public resources will support reductions in inequality for other miners struggling. This policy would slowly create a market incentive to stop mercury amalgamation in gold mining. By certifying and partially subsidizing mercury-free gold, the government enables consumers to make a decision on whether or not to support mercury processed gold. Consumers will have the power to make the decision, which will hopefully lead to industry shifts away from mercury. This process also embeds monitoring into small-scale mining. Due to permitting requirements, the miners will need to work towards becoming compliant with environmental regulations and demonstrate improvements over time. This will force miners to slowly become compliant over time, within their capabilities as to not turn them away from formalization altogether. The monitoring will benefit the community because it will make it harder for miners to be environmentally harmful in their work. One of the most significant benefits will be the subsequent reduction in mercury use and emissions. Because more miners are formalized and monitored for mercury use, mercury use will fall. Mercury bioaccumulates and biomagnifies, so reducing mercury emission quickly is key and this policy does just that. The cheaper subsidized gold will ideally compete with the gold using illicit mercury processing, which will encourage miners to obtain permits instead of using mercury. The market incentives and monitoring will reinforce plateauing mercury emissions in the ASGM sector. This is a benefit the world will feel as there will be less mercury pollution in the food chain or in the atmosphere. Mercury has the ability to travel vast distances, so preventing mercury emissions from the source will be a global benefit. Furthermore, the government support will provide the basis for policy and program research. This research will allow the government to better understand the challenges small-scale mines face and will allow the government to support informal miners without permits. The research, communication, and understanding may only be a small part of this proposal, but it acts as a crucial next step towards formalizing the ASGM industry on a larger scale. It will also provide the basis for policy changes that are rooted in understanding to support miners and stop mercury use. This policy would support individual miners as well to alleviate poverty and mercury pollution, instead of promoting more foreign owned mines. This is crucial because foreign investment often leaves Indonesia following resource extraction. On the other hand, local miners keep the revenues and economic benefits within their communities. By formalizing their industry and aiding local miners, the Indonesian government helps keep Indonesian natural resource profits in the country, instead of in the hands of foreign companies. And finally, the subsidy will make Indonesian gold more globally competitive. This will support Indonesian gold markets and ideally promote demand, resulting in Indonesian gold

purchases, thereby supporting ASGM miners and communities. The economic benefits will ripple through the economy. The subsidy will be expensive, despite the fact that it is a partial subsidy. The national government will undertake the cost in order to promote Minamata Convention compliance and ideally mitigate the economic costs of more widespread mercury poisoning. The foreign companies will also not see this as a fair deal for them to consent to. However, gold is a natural resource that only some countries are endowed with, thus it is unlikely that they can or will relocate based on this new policy. This will simply add to the cost of mining in Indonesia, which foreign companies hugely benefit from at the expense of Indonesians. Foreign mining companies are a captive audience because the mines cannot move, so they will have no choice but to accept these terms. That being said, currently operating foreign mining companies will not be subject to these rules. Until these companies renew their permits, they will be subject to the original terms of their permit. This is not ideal for Indonesians, especially given the many benefits of this policy, but permits are only grants for a set amount of time and will eventually need to be renewed, thus forcing companies to agree to these new terms. Instead of viewing this as a loss, these existing firms create a small lag in widespread policy implementation. Unfortunately, this policy also fails to actively contain anthropogenic mercury emissions in the ASGM industry. If it were possible to reduce mercury emissions, then that policy would be implemented, but past attempts have demonstrated how challenging it is to limit mercury emissions. This policy targets some of the root causes of mercury use in gold mining: insecure property rights and poverty. In addition, the monitoring and research will hopefully support the design of more policies more specifically targeted at mercury emission reductions.

Despite international commitments to climate change mitigation, Indonesia continues to construct and rely on coal-fired power plants for their energy, with the support of foreign banks and developers. The Suralaya power plant is one example of a mostly foreign funded and supported project. The Suralaya power plant is located on the coast in northwest Java approximately 75 miles from Jakarta. The power plant already has eight existing coal plants, but there are plans to add two more by December 2024. The new plants are expected to add 2,000 MW of electricity capacity to a power plant with an existing 4,025 MW of capacity (Syahni 2021). The existing power plant has already caused public health concerns, agricultural issues, and water pollution. Increasing the capacity this dramatically, will likely cause even more issues beyond the existing concerns. Black ash carried by the wind covers the entire town when the plant is active (Lee 2021). These visible particles when inhaled can be dangerous to people and are only a fraction of the particles actually released by the plant. Coal-fired power plants are among the main emitters of anthropogenically released mercury. In addition to mercury, this power plant is releasing other greenhouse gasses that directly contribute to climate change. The local fisheries have suffered immensely from this creation of this power plant. As coal is unloaded from ships at the coast, the coal dust is thrown into the sea, killing fish. The local fisheries used to be a mainstay for the local economy, but like the fish, the fisheries are now dying (Lee 2021). The Export-Import Bank of Korea, Korea Trade Insurance Corporation (K-Sure), Korean Development Bank, and KEPCO– all South Korean public financing institutions– are funding

$1.9 billion of the $3.5 billion project. KEPCO holds a 15% stake in the project. The funding is expected to continue despite Korean concerns over whether or not public money should be used to finance a coal plant. Various Korean legal frameworks encourage companies to do business overseas without any stipulations for carbon emissions (Lee 2021). Indonesian regulations make this addition legally questionable. Organizations allege that the approved 2017 permits for the plant do not meet the Environmental Ministry’s 2019 regulations, which cap sulfur dioxide, nitrous oxide, fine particulate matter, and mercury emissions (Syahni 2021). Even if the newer regulations do not apply, Indonesia has mostly committed to retiring coal as an energy source by the mid-21st century. PLN, the national electricity company and an investor in the project, has also committed to abandoning coal plants (Jong 2021b). South Korea has been phasing out coal domestically, yet it continues to fund coal abroad (Lee 2021). Indonesia should not become a polluting industry haven for foreign investors from countries that would not tolerate it within their borders. Suralaya Power Plant is one example of a coal plant with foreign investment that will have significant environmental concerns. Of twenty-two coal power deals between 2010 and 2017, 98% of the $17 billion in costs will be funded by international sources. Most of the international funding comes from China, Korea, and Japan. Furthermore, despite only domestically owning approximately 39% of these new power deals, 100% of the greenhouse gas emissions will be counted towards Indonesia’s national emissions and many of the consequences will be borne by Indonesia (“Public Finance to Indonesian Coal” n.d.). In addition to the direct environmental concerns, the financing of coal power predominantly benefits the financiers. The foreign funders will not see the immediate environmental toll, nor will they see the irrelevance of the additional capacity. Indonesia’s power expansion plans, if implemented fully, would create overcapacity (“Public Finance to Indonesian Coal” n.d.). This overcapacity will not benefit the Indonesian people, but the investors will still see returns to their investment despite the complete redundancy of it. While most of Indonesia is fully electrified, there are certain provinces lacking energy provision, yet the energy plants are not located there, further emphasizing that the beneficiaries of these power plants are not Indonesians, but rather the foreign investors (Simatupang et al. 2021).

Located in the Pacific Ring of Fire, Indonesia holds access to 40% of the world’s geothermal resources (Ha 2021). The government identified over 300 sites with geothermal energy potential that share 28 GW of energy potential, but Indonesia has only tapped into 4-5% of their potential (ASEAN Post Team 2018). With such a large, renewable, and untapped domestic energy source, relying on foreign funded fossil fuels lacks sense. Instead of foreign investment in non-renewable and toxic energy sources, Indonesia should invest in its own resources to promote long-term energy independence and self-reliance. The final policy reform is to shift foreign direct investment away from nonrenewable energy resources. To support Indonesian energy independence, capacity, and sustainability, Indonesia should ban the foreign financing of non-renewable energy sources and work with current project investors to transition the funding to renewable energy sources. Despite vague statements on the phase out of coal energy, Indonesia continues to accept foreign financing for coal-fired power plants. This is not a sustainable use of foreign investment if Indonesia intends to keep its word and phase out coal. If Indonesia does not intend on keeping

its word, then these coal plants will continue to harm the environment and humans irreversibly and contribute to climate change. Banning foreign funded coal-fired power plants will significantly reduce the related pollution. Most coal plants are developed and operate with substantial foreign funding, so removing funding will likely halt coal projects, at least until domestic funding sources can find the necessary funds. Halting the development of coal-fired power plants will protect communities and the environment from future harm. The reduction in coal related emissions will prevent emissions of sulfur dioxide, nitrous oxide, fine particulate matter, and mercury emissions. On its own, the Suralaya power plant expansion would likely contribute 19,354 kg of sulfur dioxide, 12,960 kg of nitrogen dioxide, and 17 million tons of carbon dioxide annually (Renaldi 2021). Halting coal projects in the early stages will prevent the addition of millions of tons of greenhouse gasses into the atmosphere, which if done would have catastrophic impacts of climate change. The global impact of these greenhouse gasses would be significant, but the emissions would also be felt on a local level. Indonesia has significant air quality issues, so to stop the addition of more air pollution would see many benefits. The power sector represents approximately 27% of Indonesia's total carbon dioxide emissions (Climate Transparency 2020, 5). Coal based power adds significantly to these emissions, so not adding to these emissions will also likely help Indonesia meet its Paris Climate Agreement. Indonesia meeting their goals will be politically beneficial. Failing to meet these goals as a result of coal power will not only drive climate change, but it will hurt Indonesia’s international reputation. Reducing coal power will also support Indonesian development of long-term investments. Coal-fired power plants are not a sustainable long-term investment given the global climate, especially if Indonesia intends to stop using coal as an energy source in the next few decades. Removing foreign financing support of coal power plants will free up Indonesian funding because the funding will transition to other investments. Other investments will likely see more return to their investment because they will have a longer lifetime to see the full return to investment. In order to keep investment in Indonesia, the government will promote investment in renewable energy. This will likely be much more lucrative in the long-term because they are unlikely to be phased out in the short-run, unlike coal. These energy sources will require labor in the long-term to support electricity production, which is ideal for Indonesian people seeking work.

These renewable energy sources also make more logistical sense for Indonesia. As a nation composed of remote islands, coal plants are unlikely to be able to meet energy needs where they are currently located. The Suralaya power plant will provide energy for Java, the most electrified and the most urban island (IEA 2022). The other islands that need electricity more urgently are much more remote, making coal plants a less feasible option. However, this policy does run the risk of creating a sudden stop of foreign financing in the energy sector. Foreign direct investment is 1.8% of Indonesia’s gross domestic product (World Bank 2020). This policy could be interpreted as a sudden aversion to foreign direct investment, when it is mostly aimed at banning unsustainable and disadvantageous investment in Indonesian energy infrastructure. This will hopefully be mitigated by the policy stressing the transition of funds from coal investments to renewable investments. This will hopefully

demonstrate to investors that Indonesia is still welcoming to foreign direct investment, but wants to invest in beneficial infrastructure. It is also possible that this could complicate funding for projects that are being developed. Project funders may withdraw funding from coal projects fearing the clear and current transition away from coal. But ideally investors will realize that there is a bounty of investment opportunities in renewable energy and instead will invest there.

Unchecked foreign investment projects have and will contribute to significant externalities. The Grasberg mine is one of the main symbols of mining rights abuse with both legal and illegal environmental damage without significant consequence. Furthermore, foreign gold mining concessions contribute to rampant informal mining that results in mercury emissions. And vast investments in coal fired power plants damage the surrounding environments and local economies, despite renewable alternatives. These are some of the more egregious examples of harmful foreign investment, but they exist nonetheless and harm the local communities. Indonesia is internationally regarded as a key player in biodiversity, yet their current policies do not prioritize that status. The existing policies allow foreign companies to invest in Indonesia, at the expense of the Indonesian people. These policies check the power of foreign investors and support local and domestic growth. Through these three policies, Indonesia can enjoy the vast benefits of globalization, while promoting local economic growth and environmental preservation for generations to come. While these policies are mostly aimed at transitioning Indonesian investment culture, foreign direct investment is one of Indonesia’s main benefits in globalization, so it only makes sense to further benefit from foreign investment. Indonesia’s natural resource wealth will enable these policies to take effect without too much of an economic impact. Companies are unlikely to find comparable gold mines or energy industries elsewhere, forcing them to accept more favorable terms of investment for Indonesian people. The Indonesian government has immense influence over foreign investment because of how unique many of the investment projects are to Indonesia, so the government should tap into that power. Indonesia cannot and should not sacrifice its natural resources for greedy foreign investors who do not feel the consequences of their actions. Indonesia’s natural resources should benefit Indonesians and globalization policies must reflect that view.

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