Abstract
Since 2009, there have been significant regulatory changes in coal mining in Indonesia, beginning with the enactment of Law No.4 of 2009 concerning Mineral and Coal Mining, which replaced the prior system of contracts and mining authorizations (Kuasa Pertambangan; KP) with mining business permits (Ijin Usaha Pertambangan; IUP). There are two types of IUP: exploration and production operation. Then, the mechanism of Clean and Clear was created to reduce the large numbers of overlapping licenses. This article explores Indonesian regulatory changes and court rulings in coal mining and clarifies share divestment requirements for foreign investors in Indonesian coal-mining operations, which should not be classified as indirect expropriations.
Highlights
Mining regulations in Indonesia have developed significantly from the Dutch Indie regime until the present
Since 2009, there have been significant regulatory changes in coal mining in Indonesia, beginning with the enactment of Law No.4 of 2009 concerning Mineral and Coal Mining, which replaced the prior system of contracts and mining authorizations (Kuasa Pertambangan; KP) with mining business permits (Ijin Usaha Pertambangan; IUP)
The provision on share divestment was amended by Government Regulation No.1 of 2017 concerning the Fourth Amendment of Government Regulation No 23 of 2010.52 Article 97 (1) states that holders of production and operation IUPs and IUPKs in the framework of foreign investment shall divest their shares gradually after five years of production, and that in the tenth year at least 51% of its shares are owned by Indonesian participants
Summary
Mining regulations in Indonesia have developed significantly from the Dutch Indie regime until the present. The enactment of Law No 22 of 1999 concerning Regional Governance commenced the principle of regional autonomy.3 This brought fundamental changes to governance in Indonesia and transferred most administrative authority over mining to the regional governments, at least in theory.. Under Government Regulation No 75 of 2001, mining authorizations (kuasa pertambangan; KP) were granted by the regents, mayors, governors, and ministers in accordance with their respective authorities.. The old mining law, Law No 11 of 1967, was based on a system of contracts and mining authorization (KP); Law No 4 of 2009 is based on two types of mining business permits (Ijin Usaha Pertambangan; IUP), one for exploration and one for production operation Though significant, these changes did not resolve all the existing legal problems, including overlapping licenses. This paper considers secondary legal materials, such as books, journals, and research papers, along with a dictionary as a tertiary legal reference
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