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Indonesia: Provinces Gain Authority over Mining, Forestry, and Plantation Concessions

(Apr. 8, 2013) On April 1, 2013, Indonesia’s Home Affairs Minister, Gamawan Fauzi, said that the government’s plan to transfer authority over some kinds of concessions from cities and districts to the provinces will make it easier for the central government to monitor the concessions and avoid abuse. He said that the concessions “should be [within] the authority of provinces so we’ll only have to go one step down to control” the activities.(Provinces to Take over Authority of Mining, Forestry and Plantation Concessions, JAKARTA GLOBE (Apr. 1, 2013).) The transfer of authority will cover concessions for mining, forestry, and plantations, but local governments will still be able to issue ordinary business permits to companies. (Id.)

One reason for the change is that, previously, provincial governments, which were supposed to monitor the issuance of concessions, had difficulty doing so and the central government had to resolve conflicts. Fauzi stated, “every time there’s a problem, the Home Affairs Ministry has to get involved again.” (Id.)

While indicating that he doubted the change in authority for concessions could be implemented very quickly, M. S. Hidayat, the Minister of Industry, supported the plan and indicated that he hopes the transfer will make the concession process easier for investors. He added that the “[i]nvestors’ concern is whether the process is fast and low cost. If the transfer allows for quicker [process] with no high cost involved, then it is good.” (Id.)