The President of the Republic of Indonesia has recently issued a Presidential Regulation on the land allocation for investment arrangement (“PR 70/23”) to enhance the effectiveness and efficiency of natural resource utilization in the mining, plantation, and forestry sectors. PR 70/23 establishes a task force with various vital responsibilities. These include mapping the utilization of land for mining, plantation, and forestry activities following the change or revocation of the business license and concession license in the forestry area; providing recommendations to the Head of BKPM (Badan Koordinasi Penanaman Modal) on the cancellation of business license, and concession license in forestry area; and providing opportunities for new business actors in the aftermath of such license revocations.

PR 70/23 also implements an evaluation system overseen by sector supervisors and the relevant ministers responsible for specific business activities. This evaluation process encompasses assessing the realization of the business activities and compliance with the applicable obligations. The sector supervisors will transmit the evaluation report to the task force, which will subsequently provide recommendations to the Head of BKPM to make changes to the business license, including reduction of area, revocation of business license, or concession license in the forestry area. Following the evaluation, the task force shall classify the utilization and allocation of the land by the business activities and ultimately re-allocate the land to be utilized by qualified business actors. 

In the mining sector itself, the Ministry of Energy and Mineral Resources, as the sector supervisor, delegates the authority to determine, offer, and grant the mining business license area (“WIUP”) to the Head of BKPM for lands derived from the revocation of the business license before the enaction of PR 70/23. However, it is essential to note that this mechanism does not apply to private large enterprises. For such entities, the WIUPs will be granted through a tender process.

This article has been contributed by ARKO Law, a corporate law firm based in Jakarta. The above article does not, and is not intended to, constitute legal advice; instead, this article is for general informational purposes only. Information contained in this article may not include the most up-to-date legal or other information. Should the readers have any inquiries, readers can contact the authors at info@armilarako.com. Any reliance on this article is at the user’s own risk.