The President of the Republic of Indonesia, Joko Widodo, said that one of the important concerns in his term of office in the 2019-2024 period was to invite the DPR-RI to issue the Omnibus Law. Omnibus Law is expected to be the answer to revising overlapping laws that obstruct investment and business in Indonesia.
Mining is one of the sectors that receives attention from the enactment of this Omnibus Law. As one of the capital-intensive business sectors, the mining sector in the last two years has been considered sluggish. This is not only because of the weakening price factor, but also because the mining sector is a business sector that is so full of regulations. Many regulations governing the mining sector, on the one hand, actually hamper the investment climate because it is considered too burdensome for business actors. The Omnibus Law, which will also be applied in the mining sector, is expected to be able to provide ease and certainty in doing business in Indonesia.
The Aspects of Mining Industry in Omnibus Law
The following are some aspects of the mining sector that will be part of the Omnibus Law:
- The authority to control minerals and coal by the country is conducted by the Central Government and can be delegated to the Regional Governments;
- Mining Redefinition through the demarcation of authority related to the processing and refining activities between the Ministry of Energy and Mineral Resources and the Ministry of Industry;
- The authority to grant permits lies with the Central Government;
- The issuance of mining permits by the Central Government is conducted through an integrated electronic system;
- Business actors who conduct coal processing activities will be exempted from the Domestic Market Obligation;
- Reinforcement of the State-owned Enterprises (BUMN) and Regional-owned Enterprises (BUMD). This is done through the determination of the former area of Coal Mining Concession Work Agreement (PKP2B) and the Contract of Work as the State Reserve Area, which can be endeavoured as a Special Mining Business Permit Area (WIUPK).
In addition, several issues related to the permits in mining sector will also be simplified. This is strived for bringing back investors’ interest in this industry.
Omnibus Law is seen as a breath of fresh air to revive the mining sector in Indonesia. However, what certainly concerns the mining business actors and other related stakeholders is “are there any negative impacts that need to be anticipated from the enactment of this Omnibus Law?”
This article has been written as an introduction to our topic for the next Legal Update Series: “Omnibus Law and Its Potential Effects to the Mining Industry”, Thursday, 27 February 2020 in Royal Kuningan, Jakarta. Click here to get invited to the event.
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This publication has been prepared by Aditya Yudhistira for general informational purposes only to provide clients with information on recent legal developments and is not intended as legal advice or opinion.