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Plenary judicial review hearing of the Mineral and Coal Mining Law, Wednesday (21/10) in the Plenary Courtroom of the Constitutional Court. Photo by Humas MK/Gani.

JAKARTA, Public Relations of the Constitutional Court—The Government and the DPR (House of Representatives) assess whether a production branch is important for the state, including sustainable and responsible mining, which must promote the people’s welfare. There have been challenges so that the Government and the House must make changes to improve the mining sector so that it can make a real contribution to society. This of course refers to the principles of benefit, environmental awareness, legal certainty, participation, and accountability. For this reason, Law No. 4 of 2009 on Mineral and Coal Mining was amended to Law No. 3 of 2020, said Director-General of Mineral and Coal of the Ministry of Energy and Mineral Resources (ESDM) Ridwan Djamaluddin in his statement on behalf of the Government at the judicial review hearing of Law No. 3 of 2020 on the Amendment to Law No. 4 of 2009 on Mineral and Coal Mining on Wednesday, October 21, 2020. The fourth hearing had been scheduled to hear cases No. 59/PUU-XVIII/2020, No. 60/PUU-XVIII/2020, and No. 64/PUU-XVIII/2020.

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The reason was in line with Article 33 paragraph (3) of the 1945 Constitution, which reads, “The land and the waters as well as the natural riches therein are to be controlled by the state to be exploited to the greatest benefit of the people.” “In a broad sense, this norm mandates the state to regulate, supervise, and manage natural resources for the welfare of the people,” he said before Chief Justice Anwar Usman and the other eight constitutional justices.

From Contract to License

In response to the argument by the Petitioner of case No. 64/PUU-XVIII/2020 who argued that the Mineral and Coal Mining had granted parties outside of BUMN (SOEs) and BUMD (Regional Government-Owned Enterprises) the authority to extend special mining business license (IUPK), the House said that the extension of the period in said norm is for the sake of legal certainty and not for unequal treatment. Ridwan admitted that mining investment requires a large budget and adequate technology so mining activities have been carried out for decades. The long management period is natural.

“The Petitioner should note that mining regulations in Indonesia started since the enactment of Law No. 11 of 1967. As a result of the increasing role of the private sector in this business, the Presidential Decree (Keppres) No. 75 of 1996 was issued. Its main provision is that coal mining work agreements are long term and capital-intensive,” he explained.

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He further explained that the change of mining agreements to license in the new law needs a period of adaptation. According to the a quo article, this large investment will remain in effect until the end of the agreement from the existing mining companies. To regulate the transition period, the Government issued the Government Regulation (PP) No. 77 of 2014 on the Third Amendment to PP No. 23 of 2010 on the Implementation of Mineral and Coal Mining Business Activities. Holders of expired contract of work (COW) and Coal Mining Work Agreement (PKP2B) that haven’t been extended into IUPK will be given extended business license without tender, so the word “except” in the a quo law shows the Government’s approval of the change from COW to IUPK and the guarantee of legal certainty.

"The certainty of this extension is in fact given to the IUP grantors and this provision is clearly not discriminatory and not only protects large companies. The granting of extension to IUP is the reinforcement of the Government’s supervision of mining. The central government will implement this state control,” Ridwan said.

The extension is not automatic, he added, meaning that it will only be granted to companies that have undergone evaluation and met strict requirements by the state. This is solely to maximize state revenue and protect the country’s ecosystem from uncontrolled environmental damage. “If the company doesn’t meet the requirements, the Government has a ground to not grant it business license extension,” he said.

Stock Ownership

Ridwan also said the law doesn’t diminish SOE’s rights in mining management. Pursuant to Article 75 of the Mineral and Coal Mining Law, priority rights remain with SOEs provided that if the extension period is over and the license cannot be re-extended or the request for extension is rejected by the Government on the grounds that it doesn’t meet the requirements, the priority given to SOEs can still be carried out by companies through share ownership or investment.

In relation to Article 169A, he emphasized that there has been a marked involvement of the regional government in the formulation and implementation of the a quo law. This can be seen in the licensing and economic improvement. With an extension from COW to IUPK, the regional government will receive 6% of the net profit of a mining business. "The increase in state revenue is obtained from the COW holder’s obligation to pay 4% to the central government and 6% to local governments," he said.

Also read: Hearing on Mineral and Coal Mining Law: House and DPD Absent, Govt Asks for Delay 

The petition No. 59/PUU-XVIII/2020 was filed by Kurniawan, a researcher at Sinergi Kawal BUMN, an organization focusing on monitoring, responding to, and providing input to SOEs in mining and coal. He believes the Mineral and Coal Mining Law regulates the relationship between the central and regional government as well as the exploration of natural resources. This means that the discussion of the Mineral and Coal Mining bill required the involvement of the Regional Representatives Council (DPD) as the people entrusted the DPD to represent regional interests in the formation of the law. 

The case No. 60/PUU-XVIII/2020 was filed by H. Alirman Sori and seven other petitioners. They claimed that their constitutional rights were violated because the formation of the law was discussed exclusively and privately without transparency as stipulated by existing laws and regulations. The discussion of the bill didn’t involve the DPD when it has the authority mandated by the Constitution in discussing bills relating to the relationship between the central and regional government as well as the exploration of natural resources and other economic resources.

The petition of case No. 64/PUU-XVIII/2020 was filed by by Helvis, an advocate specializing on mining, and Muhammad Kholid Syeirazi, the secretary of Nahdlatul Ulama’s Scholars Association (ISNU). They challenge Article 169A, which they believe has granted the minister too broad an authority to guarantee the extension to IUPK and reduced the role of BUMN (SOEs) and BUMD (Regional Government-Owned Enterprises). They believe it to be against Article 75 of the Mineral and Coal Mining Law. 

Writer: Sri Pujianti
Editor: Nur R.
PR:  Raisa Ayudhita
Photographer: Gani
Translator: Yuniar Widiastuti (NL)

Translation uploaded on 10/27/2020 14:43 WIB

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian version, the Indonesian version will prevail.

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