News of a new Indonesian mining law first emerged in 2016, and the draft legislation has been revised several times since, US-based international law firm Bryan Cave Leighton Paisner partner and foreign legal consultant Marius Toime noted in a legal opinion last month.
Some of the country’s major exports include crude oil, natural gas, tin, copper, gold and thermal coal.
Since 2016, the Indonesian House of Representatives (DPR) has prepared several revisions, including the latest draft on April 10, Toime noted. While it was possible that the legislative process might be delayed, the DPR intended to finalise the new law by the end of this month.
Toime pointed out that the progression of the draft law had happened despite public criticism from Energy and Mineral Resources Minister Ignasius Jonan, who warned that a new law might reinforce concerns about regulatory stability and the consistent application of mining policy, given that the existing law on mineral and coal mining was only nine years old.
Toime said that the draft law’s timing was currently under discussion. Given the tight deadline, the Ministry of Energy and Mineral Resources was in a rush to complete the consultation process, and had urged that any submissions from the private sector be sent to them as soon as possible.
“If the target deadline is not met, the entire process may be delayed until after the new DPR has been elected in 2019, [owing] to competing legislative priorities. The process could also be completely reset following the general elections to the extent that there is a change of President or controlling DPR coalition,” Toime explained.
The draft law is currently moving through the DPR’s usual legislative process, involving various Ministries and industry stakeholders, as well as the President.
Toime noted during industry organisation Djakarta Mining Club’s public consultation last month that the process had not been as clear and transparent as it should have been. “The inaccessibility . . . in particular, has meant that it has been a challenge for the industry to provide comment. This feedback will hopefully be noted so that similar processes can be improved on in the future,” added Toime.
He stated that his firm’s view was that the draft law “does not go far enough to tackle long-standing issues such as a lack of coordination between governmental authorities and the complexity inherent in the current regime, given the range of different concessions and licences, each attracting a different set of requirements”.
Some of the other comments raised during a public consultation on May 15, included that the draft law did very little, if anything, to encourage mining exploration activities in Indonesia, that it did not envisage any concrete steps towards attracting private equity or other foreign capital into the mining sector, and that the draft law should be revised to centrally concentrate the power to issue and revoke mining licences, among other things.
Toime noted that, given the abundance of natural resources in Indonesia, the country had an important strategic position on the international stage. “Despite this, the draft law has so far attracted surprisingly little attention abroad.” He suggested that perhaps the lack of attention had been as a result of the large number of recent changes to existing mining regulations, leading to a view that the changes were inevitable.
Further, he noted that some stakeholders might also believe that it was unlikely that the new law would be finalised by the end of this month, leading to a degree of comfort with a wait-and-see approach.
“Whatever the reason, it is hoped that the next step in the evolution of Indonesia’s mining laws – whenever this may take place – follows a thorough and transparent consultation with all interested stakeholders. “The new law could then set the foundations for moving towards a sustainable, competitive and successful Indonesian mining industry,” Toime concluded.