Bargaining Position of The Government in the Mining Sector Regarding the Change to a Special Mining Business Permit

Abstract

Mineral and coal mining activities in Indonesia have been going on for a long time, and because of this, many legal instruments that support it have certainly been formed. Its arrangements regarding the exploitation of minerals and coal are in accordance with Pancasila and the 1945 Constitution, however, because the Minerba Law was only able to reach legal actions after the publication of the Minerba Law, matters related to contracts of work that existed before the Minerba Law were not covered. The existence of a contract of work is considered inconsistent with Pancasila, namely the Fifth Precept “Social Justice for All Indonesian People” and Article 33 paragraph (3) of the 1945 Constitution concerning the substance of earth, water and natural resources “controlled by the state” and “used for the greatest prosperity of the people” . Post-reform, with the spirit of decentralization and regional autonomy, mining policy was directed at supporting mining management authority by local governments, and at the same time, an concession system based on mining business licenses was introduced. Contracts of work, which are standard agreements, should provide a greater portion of profits to the Indonesian people as owners of natural resources, because they have a higher bargaining position. In reality, by becoming a party to a contract of work, it does not give the Indonesian government a balanced bargaining position. To be able to accommodate the interests of the community in terms of cooperation contracts in the field of mining exploitation, it is necessary to revise existing contracts by incorporating provisions that are legally binding on business actors and the Government, especially those relating to aspects of community development and the implementation of social responsibility of business actors.