Melbourne Law School - Theses
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ItemThe Indonesian regime of mineral regulation: analysis of the current system and proposals for reform( 1998)Indonesian mineral law (which places emphasis on state-owned and operated mines) is ineffective because, in practice, the private sector (which comprises mainly foreign investment mining companies) carries out most of today’s major mining operations through a contract system which, to some extent, excludes the law. The Mining Act 1967 authorises state corporations to enter such contracts, in practice however, more than one hundred unratified mining contracts (the so-called ‘Contracts of Work’) have been concluded by the government directly with private parties. The Act limits the activities of national private parties in terms of minerals, size of mineral deposits, and their capacity to involve foreign investors in their mining activities. The situation is now that the government does not have sufficient funds to support state mining corporations. The status of most of these corporations has been changed from ‘state companies’ or ‘public corporations’ to ‘limited liability companies’. Thus, the state’s theoretical monopoly in the mining industry has not been applied in practice. The Mining Act 1967 has not, however, been amended to reflect this. Further, there has been a significant shift in the operational sphere of mining law, mainly due to the introduction of environmental and planning law, as well as a relaxation of the foreign investment regime in response to increasing economic globalisation. Reform is therefore required and, in particular, by adopting the concept of privatisation. With privatisation, foreign investors may be offered opportunities to hold licences, and the law may come to better reflect commercial reality and provide mining ventures with more certainty and security. The first part of this dissertation is a discussion of the current mineral regime. The second part looks at the problem of regime in practice and two cases of land compensation are examined. Part three recommends reforms, including, in particular, changing the types of licence by reducing tiers from six to two (exploration and exploitation licences); introducing a system of legislative ratification for government agreements; the passing of separate regulations for quarrying minerals controlled by governors in provinces; and the changing of the mining council’s power to include arbitration on mining disputes.