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The Investment Coordinating Board is Flooded with Complaints from Business Actors Over Revocation of Mineral Mining Business Permits in Indonesia

The government has officially revoked 1,118 Mining Business Permits (“IUP”) out of 2,078 recommendations for IUP revocation. The 1,118 IUP revocations include 102 IUP in nickel mining (161,254 Ha), 271 IUP in coal mining (914,136 Ha), 14 IUP in copper mining (51,563 Ha), 50 IUP in bauxite mining (311,294 Ha), 237 IUP in tin mining (374,031 Ha), 59 IUP in gold mining and 385 IUP for other minerals (365,296 Ha).

The head of the Land Use and Investment Management Task Force (Indonesian Investment Authority) stated that the government did not act arbitrarily when they decided to revoke thousands of IUPs. In accordance with the latest regulation in Indonesia, there are at least five criteria for the revocation of an IUP for Mineral and Coal that are not operating, namely:

  1. The company is declared bankrupt;
  2. The validity period of the permit has expired;
  3. Has a Borrow-to-Use Forest Area Permit (IPPKH) but did not submit a Work and Plan Budget (RKAB);
  4. Permits are complete but activities in the field are not being carried out / are not operating;
  5. The owner is unclear, and the permit is only used as collateral for the bank and is not realized.

Subsequent to the enlisted investment law in Indonesia, business actors in the mining sector face a new fount of adversity deriving from business permits. However, the government has opened opportunities for business actors whose IUPs are revoked to clarify and file objections. The head of the Land Use and Investment Management Task Force admitted that of the 1,118 IUPs that were revoked, 227 companies had submitted objections, and 160 companies had been invited to clarify. Of the 160 companies, 144 companies have complied with the invitation to clarify. The results of the objections that have been clarified will be discussed in a plenary meeting later.

The steps for submitting objections to the revocation of IUPs are:

  1. Business actors submit an objection letter to the Minister of Investment/Head of the Investment Coordinating Board (Minister of Investment/Head of BKPM) attn. Deputy for Investment Implementation Control;
  2. The Deputy for Investment Implementation Control will send an invitation letter to the business actors to clarify the Revocation Decree of IUP; and
  3. Business actors are required to prepare supporting documents, evidence of fulfillment of obligations, and justifications related to business activities for IUPs that have been revoked.

If you are one of the companies that experienced similar losses, feel free to contact us at info@schinderlawfirm.com for further consultation. Schinder Law Firm is one of many corporate law firms in Indonesia that have handled a lot of mining cases, with many experienced and professional civil lawyers and dispute lawyers in its arsenal, making it one of the top consulting firms in Indonesia.

Author: Suryani Lin

Schinder Consultant London Ltd.


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