18 Apr 2023
Mining Ministry Expands Online Licensing to Boost Transparency

Digitalization of the pre-existing manual system for licensing and approval at the Directorate General of Minerals and Coal (“DGMC”) had yet to be completed when the Investment Coordinating Board (“BKPM”) launched its Risk-Based Online Single Submission System (“OSS”) for business licensing and applications in 2021, followed by the issuance of Government Regulation No. 5 of 2021 on the Implementation of Risk-Based Business Licensing (“Reg. 5/2021”).[1] Given that these two developments were originally intended to be accessible fully online, failure to achieve full digitalization obviously left a void that caused delay and, not infrequently, confusion.

Digitalization has now been completed for the most part, and, consequently, the Minister of Energy and Mineral Resources (“MEMR”) has issued Decree No. 33.K/MB.01/MEM.B/2023 on Licensing Services at DGMC for the Minerals and Coal Sub-Sector (“Decree 33/2023”),[2] which provides guidance for business undertakings when submitting applications to DGMC.

Under Decree 33/2023, businesses should apply online to DGMC for mining-related licenses and/or approvals, either using the OSS (accessible at https://oss.go.id) or one of the DGMC’s web portals, depending on the type of license/approval sought.

1. Applications via OSS

Applications for licenses in the minerals and coal sub-sectors that come under the authority of the Central Government (MEMR) must be submitted using the OSS. These licenses, as listed in Reg. 5/2021, cover: (i) the commercial mining license (“IUP”); (ii) special mining license (“IUPK”); (iii) extension of IUPK to continue operations; (iv) mineral or coal transportation and trading license; (v) mining services license (“IUJP); and (vi) community mining license (“IPR”).

According to the OSS website, in addition to the licenses currently available on the OSS system, a wide range of licensing support services (Perizinan Berusaha Untuk Menunjang Kegiatan Usaha / “PBUMKU”) are also available online. These cover licenses related to mining services (Indonesian Standard Business Classification / KBLI No. 71102), storage of explosives (KBLIs 20292 and 06202) and mining-related trade (across all KBLI business classifications).

2. Applications via DGMC web portals

Rather than establish a unified web portal, the DGMC continues to operate separate portals, each of which is used for different applications:

1. Decree 33/2023 establishes an official web portal (https://erkab.esdm.go.id) for approval of the important Annual Work Plan and Budget (“RKAB”) document; and

2. Applications for approval of a change in the shareholding structure of a mining company, or other approval that might be required from the MEMR, should be submitted through the following portals (as applicable):

1. DGMC’s business licensing website at http://perizinan.esdm.go.id/minerba;
2. DGMC’s official email address at djmb@esdm.go.id; and/or
3. other application routes that may be provided by the DGMC from time to time.

Decree 33/2023 provides that consultations with the DGMC may only be online or by phone, with walk-in or face-to-face consultations no longer possible. Consultation hours are 8 am to 4 pm (Monday to Thursday) and 8 am to 4.30 pm (Friday).

In the event that an urgent matter necessitates face-to-face consultation, it can only be with the principal of the business concerned (director or equivalent), and by prior appointment.

ABNR Commentary

In order to focus minds and efforts, it is not unusual in Indonesia for a regulation requiring the establishment of a new system or operating arrangement to be issued well before the necessary support infrastructure has been procured, as happened in the case of Reg. 5/2021 (see Introduction above). However, as the infrastructure for Reg. 5/2021 is now in place, Decree 33/2023 has been issued to provide additional technical guidance on its operation, and to fill in various gaps that existed previously.

More generally, Decree 33/2023 is the latest step in the Government’s ongoing drive to maximize the application of information technology so as to increase transparency, eliminate opportunities for corruption and collusion between business and civil servants, and improve Indonesia’s ease of doing business. Most applications must now be made online, which, in theory at least, should significantly reduce the opportunities for face-to-face interaction between applicants and officials – long recognized as a prime source of corruption at government organizations.

However, success in achieving the objectives of digitalization will ultimately depend on the responsiveness of those charged with operating the government’s new online systems. The fact that the websites of at least some government ministries are prone to crashing, vulnerable to hacking and/or notorious for a lack of responsiveness can pose difficulties for those who need quick decisions on their applications, or are concerned about confidentiality, for example.

Nevertheless, the situation now is definitely much better than what prevailed just a few short years ago. However, as much still remains to be done, it is to be hoped that government at all levels will continue to push ahead with digitalization to the maximum extent possible.

By partner Mr. Ayik C. Gunadi (agunadi@abnrlaw.com), senior associate Mr. Mahatma Hadhi (mhadhi@abnrlaw.com), and associate Ms. Nesya Ashari (nashari@abnrlaw.com).

This ABNRNewsand its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.