Figure 2. On the podium, Ir. Tino Ardhyanto A. R. talked as a representative for the Association of Indonesian Mining Professionals. Sitting on the chairs from left to right: Prof. Hikmahanto Juwana (Professor of Law at Universitas Indonesia), Ir. Bambang Gatot Ariyono (the General Director of Mineral and Coal, Ministry of Energy and Mineral Resources), the moderator Simon F. Sembiring, and Ir. Ido H. Hutabarat (Head of Indonesian Mining Association)
On September 26, 2017, the 2nd panel of Mining and Energy Expo 2017 focused on coal and mineral resources. The first speaker was Ir. Bambang Gatot Ariyono as the current General Director of Mineral and Coal, Ministry of Energy and Mineral Resources, followed by Ir. Ido H. Hutabarat as Head of Indonesian Mining Association, Ir. Tino Ardhyanto A.R. as Head of Association of Indonesian Mining Professionals and the last speaker was Prof. Hikmahanto Juwana as Professor of Law at Universitas Indonesia.
As the current General Director of Mineral and Coal, Ministry of Energy and Mineral Resources, Ir. Bambang Gatot Ariyono underlined that mining regulation should be supported by every sector in the government. The current problem in mining regulation is because of business uncertainties due to an unstable regulation condition in the country. He also brought out about reclamation and conservation in the mining business. The government has ordered every company to commit to mining reclamation and conservation of the ex-mining land since 2011. However, the data showed that by 2017 there is only 48% of the mining fields which are committed to mining reclamation and conservation. Although the process of mine reclamation occurs once mining is completed, the planning of mine reclamation should be finalized before mining being permitted or started. Mine reclamation should be a regular part of modern mining practices so that government tends to be strict with the company by putting reclamation and conservation as one of the terms of granting mining permits. This problem, in fact, is a universal problem as stated in the Mining Policy Framework by Intergovernmental Forum in the United Nations. There are six pillars for mining regulations: 1) Legal and Policy Environment; 2) Financial and Benefit Optimization; 3) Socioeconomic Benefit Optimization; 4) Environmental Management; 5) Post-Mining Transition, and 6) Artisanal and Small-Scale Mining.
Furthermore, Ir. Bambang Gatot Ariyono also gave a slight explanation about another plan from the Directorate General of Mineral and Coal, Ministry of Energy and Mineral Resources. First is to meet the domestic needs; Second is to provide certainty and transparency on mining activities; Third is to improve supervision and to coach for the mining company; Fourth is to support the development of improving mining commodity products; and Fifth is to maintain a sustainable environment through environmental management and monitoring, including reclamation and post-mining.
Ir. Ido H. Hutabarat, as Head of Indonesian Mining Association, shared his concerned about the fall of mining investment in Indonesia in recent years. Although, for some reason, the coal price appeared to get better with a price of around USD 98 this year as compared to USD 50 in 2015. For mining investors, this is good news. Especially investors in coal sectors as it was the right time to invest. However, the investment attractiveness curve is shown conversely than expected. Compared to the total Indonesian investment in all sectors which has positive trends from 2012 to 2017, the trend of mining investment tends to be lower every year. As a matter of fact, on 2012, the mining sector gave a share of 15% to the total investment, while on 2017 it falls off to only 7% to the total investment in Indonesia. In addition to that, not only mining investment performed a depression, it is also followed by a reduction in exploration spending. The cutback in exploration will make a dreadful condition to Indonesia’s future mining business since the reserve-mining field will be exhausted due to lack of exploration program.
One of the reasons for such a decrease in shares is the uncertain regulation in Indonesia, such as the uncertainty to extend the contract. Many contracts will end in 2019, but there is no clarification from the government about the regulation. This should be fixed immediately given that the mining sector is an attractive industry for many potential investors. Ir. Ido H. Hutabarat also reviewed the new governance to Borrow Use Forest Area Permits (BU Permit). He stated that companies not only undertaking reclamation and re-vegetation in the whole mining area but also rehabilitating the relevant river basin with the same total dimension with the size of the mining field. He hoped that the government could re-consider such regulation because the negative impact on a company’s financial aspect is unavoidable.
The Head of the Association of Indonesian Mining Professionals, Ir. Tino Ardhyanto A. R., introduce Association of Indonesian Mining Professionals (PERHAPI) as the Indonesian mining certification association. More than 85% of mining employees in Indonesia is an Indonesian citizen. Therefore, it is needed to form a certification association to maintain professionalism incompetency and integration while performing work according to the standard of achievement. Also, full support from the government will also determine to develop and maintain domestic mining industries workers at every level. The purpose of PERHAPI is to promote competency and integrity for the mining industry by following three principles: (1) good mining practice; (2) common business conducts and (3) act upon Indonesia’s rules and laws. PERHAPI certification is granted by the National Agency for Professional Certification (BNPS) on 18th February 2008. One of PERHAPI projects is to quickly prepare Indonesia in the mining global communities, following The ASEAN Charter in 20th November 2017 which aims to “create a single market and production base which is stable, prosperous, highly competitive and economically integrated with effective facilitation for trade and investment in which there is free flow of goods, services and investment; and free flow of capital”. And so it is necessary to have an independent institution which purposes is to prepare Indonesia’s professional worker to have competency and integrity in competing globally.
The last speaker is Prof. Hikmahanto Juwana from Universitas Indonesia. He tried to put heads together to separate government jurisprudence position as a regulator and as an institution. As a regulator, the government acts as the highest position. It means that it could legally compose the necessary regulation and should be obeyed by every citizen including institutions in Indonesia. The objection related to the regulation could be sent to constitutional court, supreme court, administrative court or International Centre for Settlement of Investment Disputes based on the relevance. While as an institution, government position is equal to any citizen or institution beneath its jurisdiction. It is necessary to separate it to prevent the government’s ambiguity position when dealing with any laws.
The problem is that “lex specialis derogate legi generali” or “special law repeals general laws” is a common thing in the mining business. Unlike in mining industries, oil and gas industries didn’t directly put the government in the contract making. It is the duty of SKK Migas as the government representative to investors. While in mining industries, contract making is done by an investor and government without any third party. In that position, it is possible for the government to be bounded by agreement to an institution or a company due to what it is declared in the contract documents. On the other side, there should be nothing that can curb the nation’s sovereignty. Usually, the problem between investors and the government relates to the regulation. Investors worry that a change in the regulation will affect their business in long-term. Therefore, it will be better if the government can re-consider the existing regulation by considering investment stability without interventing Indonesia’s sovereignty.