Thursday, 11 October 2012


The Indonesian Miners Association (API) fear investors might quit if the condition of mining industry in Indonesia remained to be meesy with one regulation contradicting against another; under such circumstances investors might walk away from Indonesia. There was no other way for Indonesia but the Government and Parliament should make amendments on the overlapping regulations. Some articles of Law no. 4/2009 on Mineral and Mining (Minerba) and Law no. 32/2004 on the Provincial Governments might lead to inconstitutional acts. “If there was no legal assurance investors would not take any chabces, they may run away” Tony Wenas of API told Business News sometime ago.

API responded positively to the instruction of President Susilo Bambang Yudhoyono in regard to unclear rule-of-the-game in the mining industry. API had made various analysis and arrived at the conclusion that the Law needed amendments. Meanwhile recommendations to the Ministry of Energy and Mineral Resources had been set forth repeatedly, but the situation was as yet not conducive to investments. The effort to withdraw permit from the Regencies by the Central Government was facing big obstacles. “One possible wayout was by law amendment or the Government should issue Government Regulation as Substitute to Law (Perpu) etc. One thing is sure the Government must take drastic changes” Tony Wenas was quoted as saying.

Beside controversion in Article 69a, 69b Law no. 4/2009 API also saw the potential confusion in Regulations of lower degree than Law, i.e. Government’s regulation (PP) no. 24/2012 on amendments to PP no. 23/2010 on the Execution of Mining Business Minerba Activities. “The PP no. 24 reflected the Government’s good intention in terms of extending Working Contract in the form of Mining Permit (IUP). But apparently the Regents reacted with offensive stance for Judicial Review to the Constitutional Courts” Tony Wenas remarked further.

Article 112d PP no. 24/2012 already clarified that extension of KK in the form of IUM was in the domain of the Ministry of Energy and Mineral Resources. Meanwhile the Regents were ignoring the PP and referred to Law no. 4/2009 instead. API was expecting the Central Government to strengthen coordination between the Government as Head of the region at the moment when Judicial Review or law amendment was underway. The Ministry of Energy and Natural Resources must also recruit mining inspectors so controlling prices afield could be more effective. As long as the number of mining inspectors for the entire mining location in nearly 500 regencies in Indonesia was only 51 (fifty one) persons, the number was not enough for handing around 4,000 mines in all regencies in Indonesia. At least the Ministry of ESDM had recruited another 3,000 persons to control all producers of minery products.

The qualification for the position was at least S-1 Degree in Minery Sciences environmental sciences or other related sciences. If the qualification were not met, it was impossible for the Government to implement good mining practices. A good inspection would result in good and proper reporting. The Report would be sent regularly to the Central Government so control could run effectively. “We have forwarded this proposal to the Government”.

Other articles of the Minerba Law needed revision, particularly Article 169. In this Article, between point (a) which stated respect for KK/KKP2B which already existed before the Minerba Law was issued, and point (b) which demanded KK/PKB2B to adjust itself with the stipulations in Minerba Law were contradictory. Even point C of this Article was in practive contradictory to the Government’s wish to increase state income from the Mining Sector. “We are at war against the Regents, because by the time we are ready for it the Government was regarded as being unable to give approval. The Regents demanded 50 thousand, 100 thousand and 200 thousand hectares of land for mining. Because the entry was Chapter 171, if the chapter was not obeyed we are not doing the work plan in the zone where the working contract as long as the KK was valid. The Regent demanded for a certain amount of USD. We have no other choice. They demanded hundred of thousands hectares which was contradictory to Chapter 53 which stated that the right of Regencies was only 15 hectares. Frankly speaking we are confused about all this”.      

Business News - August 29, 2012       

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