SWILU Ed.4 2024 eng

AMENDMENT ON LAND ALLOCATIONS FOR INVESTMENT MANAGEMENT REGULATION

On July 22nd 2024, President Joko Widodo issued Presidential Regulation Number 76 of 2024 on Amendments to Presidential Regulation Number 70 of 2023 on Land Allocations for Investment Management (“Regulation 76/2024”). Several provisions in Presidential Regulation Number 70 of 2023 on the Land Allocations for Investment Management (State Gazette of the Republic of Indonesia Number 138 of 2023) have been amended as follows:

1. Amendment to Article 1, between points 5 and 6 of Article 1, two new points are inserted, namely points 5a and 5b, and between points 6 and 7 of Article 1, one new point is inserted, namely point 6a;
2. Amendment to Articles 12 and 13; and
3. Addition of three points between Article 5 and Article 6.

The additions to these articles are as follows:

Article 1 Point 5a: A Special Mining Business License (Izin Usaha Pertambahang Khusus – “IUPK”) is a license to conduct mining business activities in a specific mining business license area.

Article 1 Point 5b: A Coal Contract of Work (Perjanjian Karya Pengusahaan Pertambangan Batubara – “PKP2B”) is an agreement between the government and an Indonesian legal entity to conduct coal mining business activities.

Article 1 Point 6a: The Special Mining Business License Area in WUPK, hereinafter referred to as WIUPK, is the area granted to IUPK holders.

Furthermore, in Article 5, there is the addition of 3 (three) new articles, as follows:

The provisions for the distribution of Mining Business Licenses (Izin Usaha Pertambangan – “IUP”) to community groups are stated in Article 5A. This article stipulates that the business license must be offered on a priority basis to business entities owned by religious organizations, as follows:

Article 5A

1. In the context of improving community welfare, WIUPK originating from former PKP2B areas may be offered on a priority basis to Business Entities owned by Religious Community Organizations.
2. The Religious Community Organizations referred to in paragraph (1) must meet the criteria as outlined in Article 4 paragraph (6) and have an organ that conducts economic activities with the aim of empowering the economy of its members and promoting the welfare of the community/congregation.
3. The offering of WIUPK as referred to in paragraph (1) is valid for a period of 5 (five) years from the effective date of Government Regulation Number 25 of 2024 concerning Amendments to Government Regulation Number 96 of 2021 on the Implementation of Mineral and Coal Mining Business Activities.

Article 5B is explained as follows:

1. The Sector Supervising Minister delegates the authority for the determination, offering, and granting of WIUPK as referred to in Article 5A paragraph (1) to the minister/head of the agency responsible for government affairs in the field of investment/investment coordination as the head of the Task Force.
2. Based on the WIUPK as referred to in paragraph (1), the head of the Task Force determines, offers, and grants the WIUPK to Business Entities owned by Religious Community Organizations.
3. Based on the granting of WIUPK as referred to in paragraph (2), the Business Entity owned by the Religious Community Organization submits an IUPK application through the OSS (Online Single Submission/Integrated Electronic Business Licensing System).
4. Upon submission of the IUPK application as referred to in paragraph (3), the minister/head of the agency responsible for government affairs in the field of investment/investment coordination issues the IUPK in accordance with the provisions of the legislation.

Next, Article 5C provides the following explanation:

1. The IUPK as referred to in Article 58 paragraph (4) and/or the share ownership of the Religious Community Organization in the Business Entity as referred to in Article 5A paragraph (1) cannot be transferred and/or assigned without the approval of the minister responsible for government affairs in the field of energy and mineral resources.
2. The share ownership of the Religious Community Organization in the Business Entity as referred to in paragraph (1) must be the majority and must have control.
3. The Business Entity as referred to in paragraph (2) is prohibited from cooperating with the previous PKP2B holder and/or its affiliates.

The following changes are made to the provisions of paragraph (1) and paragraph (3) of Article 12, so that they read as follows:

Article 12

1. Regarding the allocation of land in accordance with the IUP as referred to in Article 5 paragraph (5) and the IUPK as referred to in Article 5B paragraph (4), the concession permit in the forest area as referred to in Article 7 paragraph (6), and the Business Licensing in the plantation sector as referred to in Article 8 paragraph (7), Business Actors as referred to in Article 4 paragraph (5) letters a to e, and Business Entities owned by Religious Community Organizations as referred to in Article 5A paragraph (1) are prohibited from transferring the allocated land and/or ownership.
2. The use and utilization of land for investment distribution must be carried out continuously by Business Actors and Business Entities owned by Religious Community Organizations.

The final amendment is to the provision of paragraph (1) of Article 13, which is revised to read as follows:

Article 13

1. Business Actors as referred to in Article 4 paragraph (5) and Business Entities owned by Religious Community Organizations as referred to in Article 5A paragraph (1) that have obtained Business Licenses as mentioned in Article 5 paragraph (5), Article 5B paragraph (4), Article 6 paragraph (7), Article 7 paragraph (6), and Article 8 paragraph (7), must fulfill their business activity obligations in accordance with the provisions of the legislation.

Regardless of the ongoing controversies related to conflicts of interest concerning the objectives of establishing religious community organizations, environmental issues, justice, and equity, it is hoped that the issuance of this Presidential Regulation will further clarify the direction and policy of natural resource management in Indonesia.

For legal assistance or if you have any questions, please contact:

Fanny
T. (+6221) 2222-0200
E. [email protected]

Bella
T. (+6221) 2222-0200
E. [email protected]