A Legal Overview on Land and Investment Task Force under Presidential Regulation Number 70 of 2023
Authors
Since its establishment in 2022, the actions taken by the Land and Investment Task Force (Satuan Tugas Penataan Penggunaan Lahan dan Penataan Investasi – “Task Force”) have elicited various response from numerous stakeholders in mining, forestry, and plantation sectors. This includes license/concession holders, investors, and policymakers. The controversies lie on the authority of the Task Force to revoke license or concession permits that have been granted to a business entity based on non-compliance. As of date, there has been a substantial amount of mining license and forestry concession permits revoked by the Task Force.
Given this context, this Client Update will provide an overview of the Task Force’s duties and obligations as well as potential legal remedies available to address the actions taken by the Task Force against the license or concessions holder.
Task Force Structure and Duties
The Task Force is established by Presidential Decree No. 1 of 2022, led by the Ministry of Investment/Indonesia Investment Coordinating Board (“MOI”) along with the Minister of Energy and Mineral Resources (“MEMR”), Minister of Environment and Forestry (“MOEF”), and Minister of Agrarian and Spatial Planning/Head of the National Land Agency (“MASP”). The Task Force is assigned to tackle issues related to the lack of productivity and non-compliance among businesses that hold licenses, concessions, or rights in the mining, forestry, and plantation sectors. The main duty of the Task Force is further regulated under the Presidential Regulation No. 70 of 2023 concerning Land Allocation for Investment Arrangements (“PR 70/2023”), where the Task Force has the following duties: [1]
- mapping land utilization for mining, plantation, and forestry activities as a result of amendments or revocations of business licenses and concession permits in forest areas;
- providing recommendations to the MOI for the revocations of business licenses in mining and plantation sectors, as well as concession permits in forest areas;
- providing recommendations to the MASP in relation to the termination of land rights (Hak Atas Tanah);
- Establishing policies for the utilization of land whose permits are altered/revoked;
- making land classification and utilization for social welfare;
- facilitating and simplifying business licensing in the land allocation process for sub-district owned enterprises (Badan Usaha Milik Desa – “BUM Desa”), regional owned enterprises (badan usaha milik daerah – “BUMD”), community organizations, small-medium enterprises (“SME”), and cooperatives;
- Providing opportunities for new business entities to obtain land allocations in accordance with the provisions of the laws and regulations; and
- Coordinating and synergizing in the utilization of land and investment arrangement for the welfare of the people.
Under PR 70/2023, the MEMR, MOEF, and MASP (“Sector Supervisor”) conduct evaluation on the business entity that holds the relevant licenses or concessions. [2] The evaluation assesses the following aspects:
- the implementation of business activities in accordance with the objectives of the licenses and concessions permit;
- submission of business activity report;
- completeness of basic requirements and continues compliance with the licenses and/or concession permits;
- conformity of business activities with the designation of the land rights;
- fulfillment of obligations to pay state revenues, both taxes and non-taxes;
- fulfillment of company work plans and budgets; and/or
- rectification of sanctions imposed in accordance with the provisions of laws and regulations.
The Sector Supervisor will deliver the evaluation report regarding the holder of mining business license, concession permits in the forest area, or plantation license to the Task Force. [3] Thereafter, the Task Force will provide a recommendation to the MOI to make changes to the relevant business licenses or concessions. Such changes may include a reduction of land area and revocation of business licenses and/or concession permits in the forest area. [4] Furthermore, the Task Force can also deliver a recommendation to the Agrarian and Spatial Planning/National Land Agency Head to carry out the elimination of land rights (Hak Atas Tanah). [5]
Classification and Allocation of Land by the Task Force
After the issuance of a decision letter regarding changes in licensing, which includes reducing land area, revoking business licenses or concessions, the Task Force is responsible for rearranging land use and investment strategies to optimize the utilization of natural resources. This involves classifying land use and allocation based on specific business activities. [6] The allocation of land is granted to business entities, covering BUM Desa, BUMD, business entity owned by a community organization, cooperatives, SMEs, or large-scale business. [7]
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Land Allocation for Mining Activities
MEMR delegates the authority for the determination, offering, and granting of Mining Business License Areas (Wilayah Izin Usaha Pertambangan – “WIUP”) to MOI. [8] In this regard, the MOI has the authority to offer and grant WIUP to BUM Desa, BUMD, business entity owned by a community organization, cooperatives, or SME. [9] For large-scale business, the MEMR is authorized to grant and offer WIUP through applicable auction procedures, as stipulated under Indonesian mining law. [10] Following the determination of the WIUP to the said entities, the Mining Business License (Izin Usaha Pertambangan – “IUP”) is granted to those entities, provided the fulfillment of all applicable requirements. [11] -
Land Allocation for Concession Permits in Forestry Area
MOEF delegates the authority to issue forest area director map and investment arrangements to MOI. [12] Subsequently, the Task Force can offer the land to the business entities and then evaluate the capabilities of the relevant entity based on potential land areas, fulfilment of administrative requirements, technical and environmental management, and financial support. [13] Following the approval of the Task Force, concession permits in the forestry area can be granted to those entities, provided the fulfillment of all applicable requirements. [14] -
Land Allocation for Plantation Activities
The Task Force will determine and offer the available land that can be allocated to business entities. The application will be assessed by the Task Force, considering the potential land areas, fulfilment of administrative requirements, technical and environmental management, and financial support. [15] Thereafter, the designated business entity shall apply for business license to the MASP for the Suitability of Space Utilisation Activities (Kesesuaian Kegiatan Pemanfaatan Ruang) and land rights, also to the MOI for the business license in the plantation sector. [16]
PR 70/2023 stipulates that land released from forest areas (pelepasan kawasan hutan) with over 70% forest cover or high environmental protection potential at business sites must be conserved as forest areas. Such land cannot be used for mining or plantation activities. [17]Conversely, land with less than 70% forest cover or lacking environmental protection potential is classified as abandoned land (tanah terlantar) and managed by the Land Bank (Bank Tanah). [18] Additionally, for BUM Desa, BUMD, business entity owned by a community organization, cooperatives, or SME that have been granted with IUP, concession rights over forest area, and business license in the plantation sector, they are restricted to transfer the allocated land or ownership. [19]
Legal Recourse Against the Task Force’s Decisions
PR 70/2023 does not stipulate specific procedures for objecting to Task Force decisions. This is understandable since PR 70/2023 is intended to facilitate a seamless coordination among ministries (i.e., MEMR, MOEF, and MASP) in addressing business entity’s unproductive or incompliances. Therefore, the relevant legal recourse against a decision issued by a Task Force would be governed by Indonesian administrative law, specifically on Law No. 30 of 2014 regarding Government Administration, as amended by Government Regulation in Lieu of Law No. 2 of 2022 (“Government Administration Law”) and Law No. 5 of 1986 regarding Administrative Judiciary, as lastly amended by Law No. 51 of 2009.
Under the Government Administration Law, the objection stage initiates the administrative remedy process, where the aggrieved party presents a written objection against a state administrative decision to the responsible authority within 21 (twenty-one) working days of the decision's communication. [20] The issuing authority is obliged to examine the objection and respond within 10 (ten) working days, confirming, modifying, or annulling the decision. If the objection is not addressed within this period, it is deemed accepted, requiring further action to reinstate the decision. [21] Subsequently, within 5 (five) working days after the 10 (ten) day period, the issuing authority must issue a decision in accordance with the objection. [22]
If the objection is denied, the aggrieved party can escalate the matter through an administrative appeal within 10 (ten) working days, directed to a higher authority. [23] The higher authority must make a decision within 10 (ten) working days of receipt, which concludes the administrative remedy process. Failure to address the appeal within this period results in its acceptance, necessitating further action to reinstate the decision. [24] In this regard, the aggrieved parties must undergo all administrative remedies process before they could initiate a lawsuit in Indonesian administrative court. [25]
When initiating claims to annul an administrative decision, a business entity may assert various grounds against the relevant government authorities. For example, lack of authority for the relevant government officials to issue the annulment, improper procedures in decision-making, or implementation of improper substance.
Article 2 (1) of PR 70/2023. ↩︎
Article 3 (1) of PR 70/2023. ↩︎
Article 3 (3) of PR 70/2023. ↩︎
Article 3 (4) of PR 70/2023. ↩︎
Article 3 (5) of PR 70/2023. ↩︎
Article 3 (8) of PR 70/2023; Article 4 (1) of PR 70/2023. ↩︎
Article 4 (5) of PR 70/2023. ↩︎
Article 5 (1) of PR 70/2023. ↩︎
Article 5 (3) of PR 70/2023. ↩︎
Article 6 (2) of PR 70/2023. ↩︎
Article 5 (5) of PR 70/2023; Article 6 (7) of PR 70/2023. ↩︎
Article 7 (2) of PR 70/2023. ↩︎
Article 7 (4) of PR 70/2023. ↩︎
Article 7 (6) of PR 70/2023. ↩︎
Article 8 (3) of PR 70/2023. ↩︎
Article 8 (5) – (6) of PR 70/2023; Article 8 (7) of PR 70/2023. ↩︎
Article 10 of PR 70/2023. ↩︎
Article 10 – 11 of PR 70/2023. ↩︎
Article 12 (1) of PR 70/2023. ↩︎
Article 77 (1) of Government Administration Law. ↩︎
Article 77 (3) – (6) of Government Administration Law. ↩︎
Article 77 (7) of Government Administration Law. ↩︎
Article 78 of Government Administration Law. ↩︎
Article 78 of Government Administration Law. ↩︎
Article 2 of Supreme Court Regulation No. 6 of 2018 regarding the Guidelines for Resolving Administrative Disputes After Exhausting Administrative Remedies. ↩︎
Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.
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