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Abstract
As Indonesia’s mining industry plays an important role in the national economy and global mineral supply chain, local communities and the environment are increasingly affected by the mining industry. This article examines Indonesia’s 2009 Mining Law to understand why it failed to effectively address the needs of communities impacted by extractive industries. Using three key elements of transformative transparency – access to information, meaningful participation and government accountability – the analysis shows that although the law sought to incorporate perspectives of local communities in different stages of the mineral value chain, it failed to ensure that local communities had adequate access to mining-related information, space for participation in decision-making and mechanisms for holding powerful actors accountable. These shortcomings are not addressed in the recent amendment of the law. Instead, the 2020 amendment reverses the promises of decentralisation and democratisation of the country’s mining sector.
Acknowledgments
The author is grateful to Päivi Lujala for helpful comments and suggestions during the course of writing this article. The author also thanks Ståle Angen Rye, Nanang Indra Kurniawan, Diana Vela-almeida, Hasrul Hanif, and Indah Surya Wardhani for their inputs on the earlier version of this article. Discussions with Maryati Abdullah and Ermy Ardhyanti provided useful insights from which this article has benefitted immensely.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 Data processed from Report of EITI Indonesia 2019–2020, accessible through <https://eiti.esdm.go.id/laporan-eiti-indonesia-2019-2020/> accessed 22 September 2022
2 IEA, ‘Total Coal Exports by Major Exporters, 1978–2020 Provisional’ (IEA, Paris) <www.iea.org/data-and-statistics/charts/total-coal-exports-by-major-exporters-1978-2019-provisional> accessed 27 July 2022; David Guberman, ‘Nickel in Indonesia: A Story of Trade Restraints and Emerging Technologies (Part 1)’ (2021) <https://www.usitc.gov/publications/332/executive_briefings/ebot_nickel_and_indonesia_part_1.pdf> accessed 22 September 2022
3 Art 33(3) of the Constitution of Indonesia states that ‘the land, the waters and the natural resources contained therein shall be controlled by the State and exploited to the greatest benefit of the people’
This article has been corrected with minor changes. These changes do not impact the academic content of the article.
4 Art 2, letter c, Law 4/2009
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16 Andrés Mejía Acosta, ‘The Impact and Effectiveness of Accountability and Transparency Initiatives: The Governance of Natural Resources’ (2013) 31 Development Policy Review s89 <http://doi.wiley.com/10.1111/dpr.12021> accessed 5 March 2019; Virginia Haufler, ‘Disclosure as Governance: The Extractive Industries Transparency Initiative and Resource Management in the Developing World' (2010) 10 Global Environmental Politics 53 <http://www.mitpressjournals.org/doi/10.1162/GLEP_a_00014> accessed 18 May 2019; Lujala and Epremian (n 12)
17 Jonathan Fox, ‘The Uncertain Relationship between Transparency and Accountability' (2007) 17 Development in Practice 663 <http://www.tandfonline.com/doi/abs/10.1080/09614520701469955>; Michael Mason, ‘Information Disclosure and Environmental Rights: The Aarhus Convention' [2010] Global Environmental Politics 10 <https://doi.org/10.1162/GLEP_a_00012> accessed 6 February 2019
18 Archon Fung, Mary Graham and David Weil, Full Disclosure: The Perils and Promise of Transparency (Cambridge University Press 2007) <www.cambridge.org/core/product/identifier/9780511510533/type/book>
19 Jonathan Fox, ‘The Uncertain Relationship between Transparency and Accountability’ (2007) 17 Development in Practice 663 <http://www.tandfonline.com/doi/abs/10.1080/09614520701469955>
20 Fung, Graham and Weil (n 11); Stephen Kosack and Archon Fung, ‘Does Transparency Improve Governance?’ (2014) 17 Annual Review of Political Science 65 <http://www.annualreviews.org/doi/10.1146/annurev-polisci-032210-144356> accessed 6 February 2019
21 Anuradha Joshi, ‘Do They Work? Assessing the Impact of Transparency and Accountability Initiatives in Service Delivery’ (2013) 31 Development Policy Review s29 <http://doi.wiley.com/10.1111/dpr.12018>; Fox, ‘The Uncertain Relationship between Transparency and Accountability' (n 17); Jonathan Fox, ‘Social Accountability: What Does the Evidence Really Say?’ (2015) 72 World Development 346 <https://linkinghub.elsevier.com/retrieve/pii/S0305750X15000704> accessed 10 February 2019; John Gaventa and Gregory Barrett, ‘So What Difference Does It Make? Mapping the Outcomes of Citizen Engagement’ (2010) 2010 IDS Working Papers 01 <http://doi.wiley.com/10.1111/j.2040-0209.2010.00347_2.x>
22 Archon Fung, ‘Infotopia' (2013) 41 Politics & Society 183 <http://journals.sagepub.com/doi/10.1177/0032329213483107> accessed 9 February 2019
23 Päivi Lujala, Christa Brunnschweiler and Ishmael Edjekumhene, ‘Transparent for Whom? Dissemination of Information on Ghana’s Petroleum and Mining Revenue Management’ (2020) 56 The Journal of Development Studies 2135 <https://doi.org/10.1080/00220388.2020.1746276>
24 Amitai Etzioni, ‘Is Transparency the Best Disinfectant?’ (2010) 18 Journal of Political Philosophy 389 <http://www.cato.org/pressroom.php?display=ncomments&id=242> accessed 23 April 2019; Suzanne Piotrowski and Gregg Van Ryzin, ‘Citizen Attitudes toward Transparency in Local Government' (2007) 37 The American Review of Public Administration 306 <http://arp.sagepub.com/content/37/3/306> accessed 26 November 2019
25 George (Rock) Pring, Donald N Zillman and Alastair R Lucas, 'Law of Public Participation in Global Energy and Resources Development: A New IBA Book' (2002) 20 Journal of Energy & Natural Resources Law 79 <www.tandfonline.com/action/journalInformation?journalCode=rnrl20> accessed 10 September
26 Iddi Mwanyoka, Makarius Mdemu and Kris Wernstedt, ‘The Reality of Local Community Participation in the Natural Gas Sector in Southeastern Tanzania' [2020] The Extractive Industries and Society <https://linkinghub.elsevier.com/retrieve/pii/S2214790X2030318X> accessed 7 August 2021; Lucy Mercer-Mapstone and others, ‘Power, Participation, and Exclusion through Dialogue in the Extractive Industries: Who Gets a Seat at the Table?' (2019) 61 Resources Policy 190 <https://doi.org/10.1016/j.resourpol.2018.11.023>
27 Marjanneke J Vijge and others, ‘Transforming Institutional Quality in Resource Curse Contexts: The Extractive Industries Transparency Initiative in Myanmar' (2019) Resources Policy 200 <https://doi.org/10.1016/j.resourpol.2019.02.006> accessed 29 January 2020
28 Arun Agrawal and Jesse Ribot, 'Accountability in Decentralization: A Framework with South Asian and West African Cases' (1999) 33 The Journal of Developing Areas 473 <http://www.jstor.org/stable/4192885> accessed 10 June 2021
29 Art 33(3) of the 1945 Indonesian constitution stipulates that the state control over natural resources is for the greatest prosperity of all people
30 Anthony Bebbington and others, Governing Extractive Industries; Politics, Histories, Ideas (OUP 2018); Brent Z Kaup and Paul K Gellert, ‘Cycles of Resource Nationalism: Hegemonic Struggle and the Incorporation of Bolivia and Indonesia’ (2017) 58 International Journal of Comparative Sociology 275 <https://doi.org/10.1177/0020715217714298> accessed 18 November 2021
31 Kadir and Murray (n 13)
32 Gandataruna and Haymon (n 5); Balbir Bhasin and Sivakumar Venkataramany, ‘Foreign Direct Investment: Replacing the Contract of Work System In Indonesia’ (2011) 8 International Business & Economics Research Journal (IBER) 35 <https://clutejournals.com/index.php/IBER/article/view/3158> accessed 16 October 2020; Terry OCallaghan, ‘Patience Is a Virtue: Problems of Regulatory Governance in the Indonesian Mining Sector’ (2010) 35 Resources Policy 218 <http://dx.doi.org/10.1016/j.resourpol.2010.05.001> accessed 2 November 2020
33 Kadir and Murray (n 13)
34 Indonesia is currently divided into 34 provinces, subdivided into 514 districts and municipalities. Each province has a directly elected governor and provincial assembly. District heads and municipal mayors as well as district/municipal assembly members are also directly elected. Law 32/2004 on Regional Government and Law 33/2004 on Fiscal Balancing between the National and Subnational Governments provide the regulatory frameworks for decentralisation in Indonesia. They provide provincial and especially district and municipal governments with extensive authority, including control over natural resources within their jurisdiction (except national defence, finance, justice, development planning and religion, which remain under the authority of the national government). The fact that provinces have no hierarchical authority over subordinate district/municipal governments and perform largely coordinating tasks as a regional representative of the national government to oversee and supervise decentralisation processes, most responsibilities regarding public services are handled by district or municipality administration, leapfrogging the provincial administration. See also footnote 37
35 Kadir and Murray (n 13); Fünfgeld (n 10); Ridwan Rusli and Ana Duek, ‘The Natural Resources Industry in Decentralised Indonesia: How Has Decentralisation Impacted the Mining, Oil and Gas Industries?’ (2010) <http://wwwfr.uni.lu/recherche/fdef/crea/publications2/discussion_papers/2010> accessed 13 October 2020
36 The 2009 Mining Law introduced three types of mining permits. First is the Mining Business Permit (Izin Usaha Pertambangan, IUP) which allows domestic and foreign companies to perform mining activities in a designated commercial mining area. IUPs are issued as ‘exploration IUPs’ and ‘production and operation IUPs’. Second, Special Mining Business Permits (Izin Usaha Pertambangan Khusus, IUPK) are intended for mining companies that wish to explore and mine in state-reserved areas; intended for strategic national mining projects, they are often given to state-owned and regional government-owned companies. During the course of mining under IUP and IUPK, two permits are required: one for the exploration and feasibility study phase and another for the production–operation phase. Finally, Peoples' Mining Permits (Izin Pertambangan Rakyat, IPR) are designed for smallholders; such permits can be granted only to domestic investors (individuals, groups, or cooperatives). Although existing CoWs and CCoWs were still acknowledged and remained under the authority of national government, the law required contracts to be (re)negotiated to ensure that their content and applicability were in accordance with current regulations. The law also regulated the possibility of extending CoWs and CCoWs under the IUPK scheme
37 Howard Dick and Jeremy Mulholland, ‘The State as Marketplace: Slush Funds and Intra-Elite Rivalry’ in Edward Aspinall and Gerry van Klinken (eds), The State and Illegality in Indonesia (KITLV Press 2011) <https://library.oapen.org/viewer/web/viewer.html?file=/bitstream/handle/20.500.12657/34687/368290.pdf?sequence=1&isAllowed=y> accessed 2 November 2020 In 2014, Law 23/2014 on Regional Government (amendment to Law 32/2004), however, transferred the authority of district/municipal authority to manage natural resources (mining, water, forests, etc.) to the provincial government. The law came into force in 2017. This signifies that, as of 2017, the provincial government has had power over natural resources within a district/municipal jurisdiction
38 Poppy S Winanti and Rachael Diprose, ‘Reordering the Extractive Political Settlement: Resource Nationalism, Domestic Ownership and Transnational Bargains in Indonesia’ (2020) 7 The Extractive Industries and Society 1534 <https://linkinghub.elsevier.com/retrieve/pii/S2214790X20302550> accessed 9 September 2020; OCallaghan (n 32); Fadhila Achmadi Rosyid and Tsuyoshi Adachi, ‘Coal Mining in Indonesia: Forecasting by the Growth Curve Method’ (2016) 29 Mineral Economics 71 <http://dx.doi.org/10.1007/s13563-016-0091-6>
39 Under Law 3/2020, the 51 per cent divestment obligation remains in place, but Government Regulation No. 96/2021 stipulates that the divestment process starts after the tenth year of production.
40 See also the general elucidation of the 2009 Mining Law.
41 EITI is a voluntary global standard that aims to improve the quality of extractive-sector governance by enhancing transparency, participation and accountability. All reports and documents on the EITI Indonesia can be accessed through <https://eiti.esdm.go.id/en/> accessed 23 September 2021
42 Presidential Regulation No. 26/2010 on the Transparency of National/Subnational Extractive Industry Revenues is the basis for the establishment of transparency mechanisms in Indonesia's extractive sector.
43 Yanuardi Yanuardi, Marjanneke J Vijge and Frank Biermann, ‘Improving Governance Quality through Global Standard Setting? Experiences from the Extractive Industries Transparency Initiative in Indonesia’ (2021) 8 The Extractive Industries and Society 100905 <https://doi.org/10.1016/j.exis.2021.100905>
44 MODI is accessible through <https://modi.esdm.go.id/> accessed 8 September 2022
45 One Map is accessible at <https://geoportal.esdm.go.id/minerba/> accessed 8 September 2022
46 Mining zones fall into three categories based on the mining activities conducted therein: mining business areas (WIUP; these are used for large- and mid-scale mineral and coal mining operations); small-scale or peoples’ mining areas (WPR); and state-reserved mining areas (WPN). Often, state-reserved mining areas contain high-value minerals that are prioritised for state- and local government-owned enterprises
47 See Ruling of the Indonesian Constitutional Court, Decision No. 32/PUU-VIII/2010 on the Judicial Review of Law 4/2009
48 Kadir and Murray (n 13)
49 According to art 36 of the 2009 Mining Law, activity plans shall include information on general geological surveys, explorations, and feasibility studies, facility construction, mining and extraction, processing, and refining/smelting, as well as transportation and sale activities
50 Art 20, MEMR Regulation 7/2020. MEMR’s official website is accessible through <www.esdm.go.id/en/> accessed 8 September 2022
51 Gandataruna and Haymon (n 5)
52 See art 39(1), letter n, and art 78(1), letter n, Law 4/2009
53 Art 25, letter c, Law 32/2009. See also art 16, 27, 28, 29, 31, 33, 57(6), of Government Regulation 22/2021 (GR 22/2021) on the Implementation of Environmental Protection and Management
54 Art 26 (1–2), Law 32/2009. See also art 30, 34, 35, 45 (3) of GR 22/2021
55 See art 113(1), letter c, Law 4/2009
56 Art 113(4), Law 4/2009
57 Karunia F Macdonald, 'The Risk Assessment of Corruption in the Awarding of Mining Permits in Indonesia' (2017) <https://transparency.org.au/wp-content/uploads/2019/10/Indonesia-report_English.pdf> accessed 9 December 2020; Dick and Mulholland (n 37); Bersihkan Indonesia Coalition, 'Coalruption: Shedding Light on Political Corruption in Indonesia's Coal Mining Sector' (2018) <https://auriga.or.id/cms/uploads/pdf/report/2/4/coalruption_en_1_en.pdf> accessed 10 November 2020; Samuel J Spiegel, 'Governance Institutions, Resource Rights Regimes, and the Informal Mining Sector: Regulatory Complexities in Indonesia' (2012) 40 World Development 189 <www.elsevier.com/locate/worlddev> accessed 6 August 2020
58 For example, in Ghana, the government established an independent Public Interest and Accountability Committee (PIAC, for petroleum revenues) under the Petroleum Revenue Management Act (PRMA) to ensure the sector’s management comply with transparency and accountability measures, and to facilitate citizens in holding the government accountable for managing and spending petroleum revenues (see Christa Brunnschweiler, Ishmael Edjekumhene and Päivi Lujala, ‘Does Information Matter? Transparency and Demand for Accountability in Ghana’s Natural Resource Revenue Management’ (2021) 181 Ecological Economics 106903 <https://linkinghub.elsevier.com/retrieve/pii/S0921800920321947> accessed 3 April 2021)
59 See art 6(1), 9, 14, 17, 29, 31, 88, and 142 of Law 4/2009
60 Robert Pitman and Rani Febrianti, ‘The Case for Publishing Indonesian Mining Agreements’ (2019) <https://resourcegovernance.org/sites/default/files/documents/case-for-publishing-indonesian-mining-agreements.pdf> accessed 26 January 2021
61 PWYP Indonesia, 'Keterbukaan Kontrak dan Perizinan di Sektor Industri Ekstraktif' (2019) <https://pwypindonesia.org/id/keterbukaan-kontrak-dan-perizinan-di-sektor-industri-ekstraktif/> accessed 26 January 2021
62 Andrew Rosser and Widya Kartika, ‘Conflict, Contestation, and Corruption Reform: The Political Dynamics of the EITI in Indonesia’ (2020) 26 Contemporary Politics 147 <www.tandfonline.com/doi/full/10.1080/13569775.2019.1693244> accessed 10 September 2020
63 Yanuardi, Vijge and Biermann (n 43); Levon Epremian and Cathrine Brun, 'Bringers of Light: Performing Resource Revenue Transparency in Liberia' (2018) 97 Geoforum 198 <https://linkinghub.elsevier.com/retrieve/pii/S0016718518302628> accessed 16 February 2019; Päivi Lujala, Christa Brunnschweiler and Ishmael Edjekumhene, 'Transparent for Whom? Dissemination of Information on Ghana's Petroleum and Mining Revenue Management' (2020) Paper 8478 The Journal of Developing Studies 1 <https://doi.org/10.1080/00220388.2020.1746276> accessed 15 December 2020
64 Art 7 (3) of Law 14/2008
65 See art 11(1), Law 14/2008. The Information Commission of Indonesia also issued a Regulation No 1/2010, which holds that contracts are public documents and must be made available to the public
66 Art 19, ‘Country Report: The Right to Information in Indonesia Provisions of the RTI Legislation Principles’, vol 19 (2019); Funfgeld (n 9); Simon Butt, ‘Freedom of Information Law and Its Application in Indonesia: A Preliminary Assessment’ (2014) 8 Asian Journal of Comparative Law 113; Coordinating Ministry for Economic Affairs of the Republic of Indonesia, ‘2016 EITI Indonesia Report’ (2018) <https://eiti.org/files/documents/vol.2-contextual-report-web.pdf> accessed 8 December 2020; Sumali Agrawal and others, ‘Impacts of Extractive Industry and Infrastructure on Forests. Assessment and Scoping of Extractive Industries and Infrastructure in Relation to Deforestation: Indonesia’ (2018) <https://www.climateandlandusealliance.org/wp-content/uploads/2018/12/Indonesia-Impacts-of-EII-on-Forests-1.pdf> accessed 10 December 2020
67 KPK, ‘Laws and Regulations in Natural Resources and the Environment (Available in Bahasa Indonesia)’ (2018) <https://acch.kpk.go.id/id/berkas/litbang/kajian-harmonisasi-undang-undang-di-bidang-sumber-daya-alam-danlingkungan-hidup> accessed 3 March 2021
68 Junita (n 8)
69 Bakti (Bobi) Setiawan and Sudharto P Hadi, ‘Regional Autonomy and Local Resource Management in Indonesia’ (2007) 48 Asia Pacific Viewpoint 72 <http://doi.wiley.com/10.1111/j.1467-8373.2007.00331.x> accessed 17 September 2020; Agrawal and others (n 66)
70 Art 162, Law 4/2009, stipulates that anyone who prevents or disrupts mining activities shall be sentenced to imprisonment of at most one year or a fine of at most IDR 100,000,000 (one hundred million rupiah)
71 M Christine Boulan-Smit, ‘“When the Elephants Fight the Grass Suffers”: Decentralisation and the Mining Industry in Indonesia’ (2014) 0 Antropologi Indonesia 57 <http://journal.ui.ac.id/index.php/jai/article/view/3437> accessed 19 November 2020
72 See art 65 and 66, Law 32/2009
73 Funfgeld (n 9); Komnas HAM (n 8)
74 Laila Kholid Alfirdaus, ‘Mining Sector Under New Law of Decentralization: A Lesson from Some Districts in Central Java Province’ (2019) 4 Politik Indonesia: Indonesian Political Science Review 63 <https://journal.unnes.ac.id/nju/index.php/jpi/article/view/15620> accessed 19 December 2021
75 Lisa Caripis, 'Combatting Corruption in Mining Approvals' (2017) <https://www.transparency.org/en/publications/combatting-corruption-in-mining-approvals> accessed 19 November 2020; Bersihkan Indonesia Coalition, '2020 Local Election: Immunity for the Indonesian Oligarchy (Available in Bahasa Indonesia)' (2020) <www.jatam.org/pilkada-2020-vaksin-imunitas-bagi-oligarki/> accessed 4 February 2021
76 Agrawal and others (n 66); Jatam, ‘The Collapse of People’s Safety and Ecological Issues during Jokowi-JK Period (Available in Bahasa Indonesia)’ (2018) <www.jatam.org/ambruknya-keselamatan-rakyat-dan-infrastruktur-ekologissepanjang-empat-tahun-pemerintahan-joko-widodo-jusuf-kalla/> accessed 3 March 2021; Michael Buehler, ‘“Try to Be More like Norway on a Sunny Day!” Regulatory Capitalism and the Challenges of Combatting Corruption in Indonesia’s Upstream Oil and Gas Sector Supply Chains’ [2020] Oil, Gas & Energy Law Intelligence
77 See eg Yanuardi, Vijge and Biermann (n 43); Hayati, Cornelius and Wibisana (n 8); Toumbourou and others (n 8)
78 Toumbourou and others (n 8); National Commission on Human Rights (Komnas HAM) (n 8)
79 Hayati, Cornelius and Wibisana (n 8); see also article 100 of Law 4/2009
80 Merah Johansyah and Alwiya Shahbanu, ‘Jokowi’s Call to Stall Mining Law Revisions Rings Hollow as Deliberations Proceed – Indonesia at Melbourne’ (Indonesia at Melbourne, February 2020) <https://indonesiaatmelbourne.unimelb.edu.au/jokowis-call-to-stall-mining-law-revisions-rings-hollow-as-deliberations-proceed/> accessed 20 January 2021; Hans Nicholas Jong, ‘Grim Toll from Indonesia’s Abandoned Mines May Get Even Worse, Report Warns’ (Mongabay Series: Indonesian Coal, February 2021) <https://news.mongabay.com/2021/02/indonesia-abandoned-mining-pit-death-toll-report/> accessed 19 December 2021
81 See art 35 of Law 3/2020
82 Indah Dwi Qurbani, Raphael J Heffron and Arrial Thoriq Setyo Rifano, ‘Justice and Critical Mineral Development in Indonesia and across ASEAN’ (2021) 8 The Extractive Industries and Society 355 <https://linkinghub.elsevier.com/retrieve/pii/S2214790X20303142> accessed 29 December 2020
83 Art 169C, Paragraph G, of Law 3/2020 further emphasises the transfer of authority to the national government
84 Hans Nicolas Jong, ‘With New Law, Indonesia Gives Miners More Power and Fewer Obligations’ (Mongabay Series: Indonesian Coal, 2020) <https://news.mongabay.com/2020/05/indonesia-mining-law-minerba-environment-pollutioncoal/> accessed 25 January 2021; Hogan Lovells, ‘Indonesian Mining Bill Passed into Law, Poses New Challenges and Opportunities’ (2020) <https://www.hoganlovells.com/-/media/hogan-lovells/pdf/2020-pdfs/2020_06_24_ierp_alert_indonesian_mining_bill_passed_into_law_poses_new_challenges_and_opportunities.pdf> accessed 2 December 2021
85 Qurbani, Heffron and Rifano (n 82); Hans Nicolas Jong, ‘“Unbridled Exploitation”: Mining Amendments a Boon for Indonesia’s Coal Industry’ (Mongabay Series: Indonesian Coal, 2020) <https://news.mongabay.com/2020/03/indonesia-omnibus-coal-mining-permits/> accessed 10 November 2020
86 Art 87 B-C, Law 3/2020
87 Art 87D (1-2), Law 3/2020
88 Art 1, para 28A, Law 3/2020
89 Muhamad Muhdar, Muhammad Tavip and Rahmawati Al Hidayah, 'State Failure in Recognition and Protection of Indigenous Peoples over Natural Resource Access in East Kalimantan' (2019) 27 Asia Pacific Law Review 127 <www.tandfonline.com/doi/abs/10.1080/10192557.2019.1665921> accessed 23 November 2020
90 ch 1.4 Complaints and Grievance Mechanism and Access to Remedy 2018 (IRMA Standard for Responsible Mining)
91 For example, such criteria are provided in the United Nations Guiding Principles on Business and Human Rights accessible through the United Nations <ohchr.org> and the IRMA Standard for Responsible Mining accessible through IRMA Standard <responsiblemining.net> accessed 17 September 2022