Impact
of Nominee Agreement on Mining Business Entities Against the Welfare of the
People
|
|
ABSTRACT |
|
|
Nominee Agreement, Mining, People's
Welfare. |
|
This study delves into
the regulation of foreign share ownership and the prohibition of nominee
agreements in the establishment of mineral and coal mining entities in
Indonesia, aiming to ensure legal certainty and promote the welfare of the
people, as mandated by Article 33 paragraph (3) of the 1945 Constitution.
Employing three legal theories—basic legal values (Gustav Radbruch),
legal system theory (Lawrence Friedman), and the welfare state—the research
method incorporates both normative juridical and empirical juridical
approaches. The findings reveal that nominee agreements, though legally
questionable under Article 1320 of the Civil Code, serve as a means for
foreign investors to secure their interests in Indonesian mining ventures. An
Environmental Analysis of Law (EAL) employing the Cost-Benefit Analysis (CBA)
method indicates a positive impact on the welfare of communities in Morowali and Kutai Kartanegara regencies due to these agreements. Proposing
an ius constituent approach, the study advocates for
relaxed foreign ownership regulations, allowing up to 51% ownership during
the initial establishment period, accompanied by a mandatory divestment to
49% after ten years of exploration. Such a policy shift obviates the need for
nominee agreements, ensuring both investment security and legal clarity.
Supervisory mechanisms are recommended to oversee divestment and reinvestment
processes, ensuring equitable distribution of mining dividends and bolstering
legal certainty in mining operations. These proposed regulatory adjustments
are envisioned to foster equitable resource management, thereby advancing the
welfare of the Indonesian populace, particularly in Morowali
and Kutai Kartanegara
regencies. |
|
|
||
|
|
|
This study explores the
impact of nominee agreement practices on people's welfare in the case of
mineral and coal mining business entities. In Indonesia, the mining sector has
great potential as a natural resource that can improve people's welfare.
However, the practice of nominee agreements used by foreign investors in
foreign share ownership can hamper the government's efforts to maintain state
sovereignty and ensure the people enjoy the economic benefits of natural
resources fairly
This research pays attention to the background of
the latest regulations related to investment, such as the Job Creation Law,
which seeks to create a conducive business climate but still pays attention to
the sovereignty and welfare of the people
This study builds upon previous research
highlighting the detrimental effects of nominee agreement practices in various
industries. For instance, Smith et al.
Through this research, wise solutions can be found
in dealing with the practice of nominee agreements, which align with legal
principles and pragmatic economic needs
Thus, this research focuses on identifying problems
and research urgency and tries to provide concrete solutions by considering
legal, economic, and social aspects. The implications of this research are
expected to guide policymakers in formulating effective regulations to overcome
nominee agreement practices and ensure people's welfare is a top priority in
natural resource management.
This research
uses a statute and conceptual approach to reveal and analyze
the legal issues studied. The statutory approach examines all laws and
regulations related to the legal issue being addressed. This allows researchers
to find consistency between various laws and regulations and trace the
ontological and philosophical basis of the formation of such laws. In addition,
a conceptual approach is used to understand the views and doctrines that
develop in legal science so that researchers can build legal arguments relevant
to the issue under study.
The object of
this research is the legal issues faced, which will be analyzed
and understood through various laws and regulations and conceptual views in
legal science. Research data sources consist of primary data and secondary
data. Primary data is obtained directly from the source through field
observation or limited interviews with related parties, such as the Ministry of
Investment / BKPM, Ministry of Energy and Mineral Resources, Ministry of Law
and Human Rights, OJK, and other informants. Meanwhile, secondary data is
obtained through literature study, official and unofficial document collection,
and web browsing related to the research topic.
The
population in this study is all documents, regulations, and conceptual views
relevant to the legal issues studied, while the sample is selectively selected
based on predetermined criteria. Data collection techniques include literature
study, document collection, and limited interviews. Limited interviews were
conducted through various communication media such as telephone, email, zoom
meetings, and Facetime to strengthen and support secondary data.
Data analysis
techniques are carried out through reading and understanding the documents that
have been collected, as well as by identifying and evaluating the consistency,
relevance, and implications of laws and regulations and conceptual views
studied. Using this method, this research can provide a deeper understanding of
the legal issues under study and provide a strong argumentation basis to solve
problems that arise.
RESULTS
Table 1.
Number of Mines and Smelters in Morowali Regency
|
Information |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Smelter |
3 |
3 |
4 |
4 |
4 |
|
Mining** |
61 |
48 |
46 |
85 |
70 |
Source: ESDM Office of Morowali Regency.
Until 2021, around 70 mining companies and 4
smelters in Morowali have a positive economic impact,
including employment and infrastructure development. Their existence also helps
manage natural disasters, such as the earthquake and tsunami in Palu Donggala 2018.
Table
2. Gross Regional Domestic Product (GDP) in Morowali
Regency
|
Year |
||||
|
2017 |
2018 |
2019 |
2020* |
2021** |
|
17.040.812.000.000 |
37.356.484.400.000 |
45.244.727.100.000 |
61.985.633.100.000 |
98.779.810.000 |
Source:
Data from the Central Bureau of Statistics of Morowali
Regency
Description:
*Provisional Number, **Very Provisional Number
The data shows that the Morowali
area's GDP has increased yearly; in 2021, it reached Rp. 98.779.810.000,- (ninety-eight billion seven hundred
seventy-nine million eight hundred ten thousand rupiah). The figure obtained by BPS Morowali Regency is provisional. The existence of a roster
system for mining employees resulted in high mobility in Morowali. This positively
impacts the local economy; for example, the people of Morowali can enjoy
vegetables and fruits from outside the area, and vice versa, mining employees
can bring local produce and crafts to be taken out of Morowali.
Table
3. Regional Revenue/Royalty/PNBP in Morowali Regency
|
Income |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Smelter |
|
14.176.785.829.800 |
16.672.681.936.350 |
43.377.546.043.380 |
|
|
Mining |
|
10.344.010.530.360 |
14.148.026.164.170 |
11.361.966.547.230 |
|
Source:
Data from the Central Bureau of Statistics of Morowali
Regency
BPS Morowali Regency has not yet obtained and
uploaded on its official website the amount of Regional Revenue/Royalties/PNBP
in Morowali Regency in 2021. However, judging from the Regional
Revenue/Royalty/PNBP data in Morowali recorded in BPS, it can be seen that
regional revenue from the mining sector, especially smelters in Morowali, has
increased every year. This means that the existence of mining businesses that
involve foreign investors has an important role in the economic progress of the
Morowali region. Local governments use
the increase in regional revenue to finance the development of regional
infrastructure and regional infrastructure. In addition, it is also used to
improve the local economy, for example, the provision of Bumdes
that serve the buying and selling of fish catches and local community
agricultural products to be sold to mining companies and smelters.
Table
4. Number of Population of Morowali Regency
|
Kind Gender |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Man |
59.919 |
60.895 |
61.898 |
89.174 |
- |
|
Woman |
57.411 |
58.397 |
59.398 |
72.553 |
- |
|
Total |
117.330 |
119.292 |
121.296 |
161.727 |
- |
Source: Central Bureau of Statistics Morowali Regency
Description: In 2021, there is no official data
Along with the growth of the economy, Morowali also increased its population. The population of Morowali in 2020 reached 161,727 (one hundred sixty-one
thousand seven hundred twenty-seven) people. This number is relatively small
for a district-level area. Compared to the huge mining potential in the Morowali Regency area, the available labour force is still
very limited and not balanced with the need to optimise the mine. Therefore, it
is necessary to support manpower deployment from other regions. Especially for
skilled labour, recruitment from other cities and districts with appropriate
educational facilities, including vocational education, is needed.
Currently, mining and smelter companies need a lot
of manpower, both professional and informal. For example, in the IMIP
Industrial Estate, there are currently approximately 31,000 (thirty-one
thousand) Indonesian workers and 5,000 (five thousand) foreign workers. In
addition, the Transon Group Industrial Estate
currently has approximately 2000 (two thousand) Indonesian and foreign
workers. This number is not a small
number, which, of course, impacts various sectors. For example, there is a need
for basic commodities that the people of Morowali can
supply. In line with that, a CSR/PPM program provides skills training for local
communities.
Table
5. Number of Education Facilities in Morowali
District
|
Level Education |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
SD/equivalent |
145 |
148 |
148 |
148 |
165 |
|
Junior High School / Equivalent |
46 |
48 |
48 |
43 |
43 |
|
High School/Equivalent |
18 |
17 |
26 |
26 |
26 |
|
Sum |
209 |
213 |
222 |
217 |
234 |
Source: Central Bureau of Statistics Morowali District.
The number of educational facilities in Morowali Regency from 2017 to 2021 has increased in line
with the increasing population, even though it decreased in 2020. In 2021,
educational facilities in Morowali Regency reached
234 (two hundred and four) schools consisting of elementary/equivalent to high school/equivalent.
Morowali Regency did not have a university, but due
to the need for high professional manpower, the Ministry of Industry
established the Morowali Metal Industry Polytechnic
in collaboration with the IMIP Industrial Estate, especially in vocational
programs. Through the establishment of this polytechnic, it is hoped that Morowali Regency can meet the needs of manpower, and there
will be no need to take workers from outside Morowali
or Central Sulawesi Province. In addition, not a few students and local
students get scholarships from mining companies to study in big cities such as
Makassar, Surabaya, Yogyakarta, Bandung and Jakarta.
Moreover, the company also provides scholarship
programs for outstanding students to study abroad. Thus, the mining industry in
Morowali can be mottoed
with the principle of "From, By and For Morowali".
Included in this is the use of mines for the welfare of the people of Morowali.
Table
6. Number of Health Facilities in Morowali Regency
|
Level Facilities |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Hospital |
2 |
2 |
1 |
2 |
2 |
|
Clinic |
2 |
2 |
2 |
6 |
4 |
|
Phc |
9 |
9 |
9 |
9 |
9 |
|
Posyandu |
153 |
153 |
151 |
150 |
153 |
|
Polindes |
72 |
72 |
83 |
- |
96 |
Source: Central Bureau of Statistics Morowali Regency
Description: No data
The number of health facilities in Morowali from 2017 to 2021 has increased in line with the
increasing population of Morowali. Of the community
service facilities, hospital facilities have not increased over the last 5
(five) years. The number of clinics has increased even though in 2021, it
dropped again to only 4 (four). Technically, these clinics are more likely to
be upgraded to class C or B hospitals.
In addition, CSR/PPM funds from mining and smelter
companies have been used to improve health quality, such as adding nutrition to
posyandu activities. In addition, mining and smelter
companies also have health clinics that cater not only to company employees but
also to the general public. Moreover, there are social service activities in
the form of health services through mobile clinics and ambulance facilities
from mining companies to mining circle communities. This means that mining
companies in Morowali Regency have indirectly
improved the health services of the Morowali
community, especially people in remote villages who are increasingly
accessible.
Table
7. Road Infrastructure Within Kilometers in Morowali Regency
|
Managed By |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Country |
- |
183,31 |
185,31 |
185,31 |
185,31 |
|
Province |
185,31 |
46,01 |
46,01 |
46,01 |
46,01 |
|
Regency |
717,4 |
671,39 |
717,04 |
717,04 |
717,04 |
|
Total |
902,35 |
900,71 |
948,36 |
948,36 |
948,36 |
Source: District Public Works Office Data
Processed by the Central Bureau of Statistics of Morowali
Regency
The amount of road infrastructure in kilometres in Morowali in 2021 is still the same as in 2019, which is
948.36 (nine hundred forty-eight point thirty-six) kilometres. This indicates
that although the population and regional income have increased, the
government-owned infrastructure is still minimal and has not been added. Today,
people can enjoy road facilities in remote villages built by mining companies.
In the future, there needs to be a local government policy to build more road
infrastructure, bridges and public transportation terminals to support the
economic activities of the Morowali area. Such
policies can be synergized with mining investor programs that require
supporting infrastructure for their business activities.
Broadly speaking,
based on the data above, it can be seen that the existence of mining and
downstream mining industries can improve the welfare of the Morowali
community even though there is still an imbalance between the number of mining
companies and the amount of GDP contribution as well as regional revenues /
PNBP and mining royalties received by Morowali
Regency with the reality of the life of the Morowali
community. The existence of mining and
downstream mining industries still positively impacts improving the welfare of
the people of Morowali. Currently, 1 (one) Morowali Metal Industry Polytechnic has been built in the
IMIP Industrial Estate, and there is already an airport operating in Morowali that serves domestic routes.
Based on the CBA method, it was revealed that the
presence of the mining industry from upstream to downstream in Morowali could provide benefits, namely improving the
economy and welfare of the Morowali people and
increasing the country's foreign exchange through taxes, PNBP and royalties. According
to Gustav Radbruch's opinion on the theory of legal
objectives, law must have expediency value. Although the nominee agreement is a
form of legal smuggling, the nominee agreement can optimize the processing of natural
resources in Morowali Regency to increase foreign
exchange and regional revenue/royalties, PNBP and regional GDP increase. In
addition, through optimal processing of natural resources, it can provide
multiplier effects for the economy and the Morowali
community, which is increasingly developed and developed. In addition to land,
sea, and air traffic links, the communication system in Morowali
is also adequately facilitated by the presence of mining companies that build
Base Transceiver Stations (BTS). Through the
development of telecommunications infrastructure that facilitates wireless
communication between communication devices and operator networks," Morowali district has become less isolated. This district
became connected with other cities in Indonesia and even the world.
Kutai Kartanegara Regency is
one of the coal producers in East Kalimantan province. To identify the types of
impacts that exist along with measurement indicators and calculations need to
be based on several variables, including:
Table
8. Number of Mines and Smelters Kutai Kartanegara Regency
|
Information |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Smelter |
- |
- |
- |
- |
- |
|
Mining** |
- |
- |
67 |
- |
200 |
Source: ESDM Office of Kutai Kartanegara Regency
The table shows that from 2017 to 2021, the number
of mining companies in Kutai Kartanegara
has increased. The increase in the number of IUP in Kutai
Kartanegara is accompanied by an increase in regional
income to improve the economy in Kutai Kartanegara.
Table
9. Gross Regional Domestic Product (GDP) Kutai Kartanegara Regency
|
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
3.350.380.890.000 |
4.056.074.060.000 |
5.365.245.350.000 |
- |
- |
Source: Data from the Central Bureau of Statistics Kutai Kartanegara Regency
Information:
Based on these data, it can be seen that the GDP of
the Kutai Kartanegara area
reached Rp 5,365,245,350,000 (five trillion three hundred sixty-five billion
two hundred forty-five million three hundred fifty thousand rupiahs) in 2019. As for
2020 and 2021, BPS Kutai Kartanegara has not updated the relevant data. PPDBRB
in Kutai Kartanegara from 2017 to 2019 was greater than that of PPDRB in Morowali. This is reasonable considering that coal
commodities can be exported after the company meets the DMO and the large
number of coal IUP in Kutai Kartanegara. Admittedly, because of the
contribution of this mining sector, Kutai Kartanegara Regency is known as one
of the richest districts in Kalimantan.
Table 10. Regional Revenue/Royalties/PNBP Kutai Kartanegara Regency
|
Income |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Land rent |
60.155.630.000 |
16.195.260.000 |
9.833.360.000 |
- |
- |
|
Royalty |
582.150.520.000 |
932.521.420.000 |
1.410.983.170.000 |
- |
- |
Source: Data from the Central Bureau of Statistics Kutai Kartanegara Regency.
BPS Kutai Kartanegara Regency has not received and
uploaded data on its website, so there has been no updated data on regional
revenue/royalties/PNBP Kutai Kartanegara
Regency in 2020 or 2021. However, data on regional revenue/royalties/PNBP of
Kutai Kartanegara Regency from 2017 to 2019 increased. Finally, in 2019 it was
recorded at Rp 1,410,983,170,000.- (one trillion four hundred ten billion nine
hundred eighty-three million hundred seventy thousand rupiahs). From an
economic perspective, the amount of mining royalties obtained by the local
government can be used to build regional infrastructure as well as facilities
and infrastructure to realize equal welfare of the Kutai
Kartanegara community.
Table
11. Number of Population Kutai Kartanegara
Regency
|
Kind Gender |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Man |
394.876 |
403.825 |
412.529 |
380.560 |
- |
|
Woman |
357.215 |
365.512 |
373.593 |
348.822 |
- |
|
Total |
752.091 |
769.337 |
786.122 |
729.382 |
- |
Source: Data from the Central Bureau of Statistics Kutai Kartanegara Regency
Description: In 2021 there is no official data
The population of Kutai Kartanegara in 2020 reached 729,382 (seven hundred
twenty-nine thousand three hundred eighty-two) people. This number is
relatively small for the size of a district-level area. This means that the
potential of human resources to engage in economic activities, including the
mining business sector, is also limited. Thus, this business field still
requires workers from outside the district. Local labor
absorbed by mining companies, for example, ranging from informal workers to
experts. Given that there are already universities and high schools in Kutai Kartanegara, even though it
is not sufficient for needs, local workers can be absorbed. This is an
indication of the positive impact of the presence of the mining industry in Kutai Kartanegara.
Table
12. Number of Education Facilities Kutai Kartanegara Regency
|
Level Education |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
SD/equivalent |
501 |
501 |
507 |
508 |
510 |
|
Junior High School / Equivalent |
189 |
191 |
196 |
198 |
202 |
|
High School/Equivalent |
66 |
66 |
116 |
112 |
115 |
|
Sum |
756 |
758 |
819 |
818 |
827 |
Source: Central Bureau of Statistics Kutai Kartanegara Regency
Although the population has decreased, the number
of educational facilities in Kutai Kartanegara has increased where in 2021 educational
facilities in Kutai Kartanegara
reached 827 (eight hundred twenty seven) schools, consisting of elementary /
equivalent to high school / equivalent. Looking at the website data of the
Ministry of Education, information was obtained that in Kutai
Kartanegara from 1984 there was already Kutai Kartanegara Tenggarong University. The number of mining companies in Kutai Kartanegara has a positive
impact on the education side. Among them, through CSR / PPM which is
distributed in the form of educational scholarships intended for the local
community of Kutai Kartanegara.
The benefits are clear, namely so that people can receive education not only
until high school but up to the college level.
Table
13. Number of Health Facilities Kutai Kartanegara Regency
|
Level Facilities |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Hospital |
3 |
3 |
3 |
3 |
3 |
|
Clinic |
46 |
46 |
32 |
44 |
44 |
|
Phc |
** |
** |
171 |
171 |
171 |
|
Posyandu |
760 |
766 |
** |
** |
** |
|
Polindes |
66 |
66 |
** |
** |
** |
Source: BPS Kutai Kartanegara Regency
The number of health facilities in Kutai Kartanegara from 2017 to
2021 tends to stagnate, especially posyandu and policies,
which were forced to be eliminated due to the COVID-19 pandemic. Even so, the
number of puskesmas in Kutai
Kartanegara, which reached 171 (one hundred and
seventy-one), is definitely not small. This is inseparable from the role of
mining companies in remote areas that require health facilities for company
employees and the community. Therefore, mining companies must prioritize CSR
and PPM for communities around the mine. Companies already operating must also
pay dust money for ring 1 (village/kelurahan areas)
communities. In this case, dust money is mandatory compensation the company
must pay society.
Table
14. Road Infrastructure Within Kilometers in Kutai Kartanegara Regency
|
Managed By |
Year |
||||
|
2017 |
2018 |
2019 |
2020 |
2021 |
|
|
Country |
360,65 |
360,65 |
** |
** |
** |
|
Province |
222,24 |
222,24 |
** |
** |
** |
|
Regency |
2.193,02 |
2.193,02 |
** |
** |
** |
|
Total |
2.775,91 |
2.775,91 |
** |
** |
** |
Source: District Public Works
Office data processed by BPS Kutai Kartanegara Regency
There is no latest data on road infrastructure in Kutai Kartanegajra Regency. The
data displayed is data owned by the government. Beyond that, there are
infrastructure facilities owned by private parties, especially mining
companies, both land, sea, and air transportation. An example is a mining road
that is also indirectly used by people in remote areas.
Although currently, in Kutai
Kartanegara, there are no large companies processing
mining products, from the record of many IUP in Kutai
Kartanegara, it can certainly be a driver of regional
economic development. The problem is that investors holding mining IUP need
security guarantees for business continuity and investment. This can be
fulfilled, among others, if they become the majority shareholder to become the company's
controller. Given that the limitation of foreign share ownership should not
exceed 49% (forty-nine per cent), investors are forced to work around this by
entering into a nominee agreement.
From limited data and studies on CBA, it can be seen that the nominee
agreement has a greater benefit than the costs incurred, both the burden on the
government and the community. It can be concluded that although the nominee
agreement is a practice of legal smuggling, its existence positively impacts
supporting policies to improve public welfare. This can be seen from the GDP
indicator, regional revenue/PNBP, and mining royalties, which are of very large
value in Morowali and Kutai
Kartanegara. Admittedly, the nominee agreement is a
form of legal investigation/smuggling of the share ownership limit in mining
business entities. However, studies based on the CBA method are limited in Morowali and Kutai Kartanegara, resulting in the conclusion that the existence
of nominee agreements needs to be tolerated because it can have an impact in
the form of large benefits for the community around the mine. In this case, the
purpose of making a nominee agreement is only to use legal means to ensure the
interests of foreign investors can invest safely, especially to hold a position
as management controller through voting control at the GMS. However, legally,
they will not be able to become mine owners.
Meanwhile, being a management controller will not
mean being the holder of natural resource sovereignty. For example, the state
determines that companies can export coal commodities after fulfilling DMO
obligations. Similarly, the state regulates HPM every month for nickel
commodities. This means the state remains the controller and holder of natural
resource sovereignty.
From these various problems, it is considered
necessary to review the provisions regarding the prohibition of nominee
agreements, especially during the economic recovery period after the COVID-19
pandemic. In addition, to further ensure legal certainty, especially to stop
the practice of nominee agreements, it is necessary to review the policy option
of relaxing the limit on foreign share ownership in the mining sector to a
maximum of 51% (fifty-one per cent) starting from the establishment of a
mineral and coal mining business entity until the deadline of 10 (ten) years.
After that, foreign share ownership is limited to a maximum of 49% (forty-nine per
cent). The maximum limit needs to be set so that there is no absolute control
and ownership of foreign investors. That way, state control and authority over
natural resources is maintained and not reduced by the limited majority of
shares. Furthermore, the government needs to set up a comprehensive supervision
mechanism for the implementation of divestment and supervision of dividend
proceeds that must be reinvested in Indonesia for a certain period of time.
With this
rationality, the purpose of mining management to prosper the people can be
maximally realized. This aligns with the orientation of Jeremy Bentham's
utility theory, which states, "The
Greatest Happiness of The Greatest Number," which means that the law must
provide the greatest benefit to society. If it does not provide benefits, then
it is not a law. In the context of CBA, a pragmatic approach is needed to
support policies prioritising national interests,
namely, realizing the welfare of the people. The results of the CBA study
justify the need for the government to take pragmatic and pro-people policy
options without violating the constitution of the 1945 Constitution.
After applying the
CBA method study in Morowali and Kutai
Kartanegara, it can be concluded that technically
juridical, to eliminate the practice of nominee agreements, a policy of
relaxation of foreign share ownership restrictions in the mineral and coal
mining sector is needed to a maximum of 51% (fifty-one per cent) for a period
of 10 (ten) years. Furthermore, it is necessary to conduct a CBA study from a
policy perspective which concerns the following aspects:
How
relaxation will be applied.
The relaxation of
foreign share ownership of 51% (fifty-one per cent) is applied from the
establishment of mining business entities until the 10th (tenth) year. After 10
(ten) years, the company must divest its shares so that the composition of
foreign shares is a maximum of 49% (forty-nine per cent). As for existing
mining companies, adjustments are needed, such as making changes to the
Company's Articles of Association through the GMS with a deadline set by the
government.
Who will be
responsible for the implementation of relaxation?
The government is
responsible for implementing relaxation, in this case, the Ministry of Energy
and Mineral Resources. However, the policy must be integrated with the Ministry
of Investment / BKPM so that it can be socialized to invite more investors
interested in doing business in the mining sector in Indonesia. In addition, it
also needs to be harmonized with the authority of the Ministry of Law and Human
Rights in the context of recording the Company's Articles of Association.
How to supervise
the application of relaxation.
Given that
currently, company registration and changes to the articles of association must
be recorded in the AHU system and the RBA OSS system, the implementation of
relaxation supervision is carried out through links and matches between
ministries and institutions. The relevant institutions and ministries are the
Ministry of Law and Human Rights c.q Directorate
General of AHU, Ministry of Investment / BKPM and Ministry of Energy and
Mineral Resources c.q Directorate General of Mineral
and Mineral Resources.
Who will do
the relaxation supervision?
Supervision and
guidance are in the Ministry of Energy and Mineral Resources c.q the Director General of Minerba.
This is because this ministry is recognized by law as having authority and
responsibility in managing Indonesia's natural resources. Supervision must
ensure that state sovereignty over natural resources is not depleted or
reduced. Through strict and effective supervision, the management of mines
owned by the Indonesian nation and controlled by the state can provide maximum
benefits for the welfare of the people.
How and when
relaxation will be evaluated.
The relaxation
policy must be evaluated every 5 (five) years, especially to ensure no absolute
control of natural resources, both in business and practice by foreign
investors. If the evaluation results have potential irregularities, the
government can withdraw the relaxation policy. The licensing instrument, namely
IUP, must be an instrument of supervisory control by the government. That is,
if investors commit deviant actions or do not contribute to the welfare of the
people in accordance with their obligations, the IUP can be revoked. Therefore,
continuous evaluation is needed, considering that natural resources are
unrenewable resources that must be wisely used to improve people's welfare.
Table 15. Foreign
Share Ownership Relaxation Option 51%
|
No |
COST |
BENEFITS |
|
1 |
Dominant foreign investors |
Increased interest of foreign investors |
|
2 |
Control of the business in foreign hands |
Acceleration of national economic recovery |
|
3 |
Dividends return to the investor's country |
Natural resources can be managed optimally |
|
4 |
Community resistance around the mine |
Increase in foreign exchange/state revenue
through taxes, PNBP, mining royalties |
|
5 |
Reduced natural resource sovereignty |
Increased employment |
|
6 |
Regulatory adjustments |
Improvement of road infrastructure, ports,
telecommunication facilities |
|
7 |
Regulation and supervision of the implementation
of share divestment and re-investment |
Improvement of educational facilities, health
services, economic facilities and trade |
|
8 |
|
Skill improvement and technology transfer |
|
9 |
|
Increased legal certainty assurance |
|
10 |
|
Eliminate nominee agreement practices |
The option of
relaxing foreign share ownership to 51% (fifty-one percent) for a period of 10
(ten) years, in a policy perspective has potential pros and cons. The counter
stance is based on the grounds that the relaxation will result in an increase
in the dominant position of foreign investors in the mining industry.
Consequently, they will retain control in mining operations, including in
determining not to re-invest and withhold dividends. Such conditions will
encourage the emergence of resistance from the mining community. The
community's objection is based more on reducing the sovereignty of natural
resources. The option to relax share ownership also requires regulatory
adjustments, especially Law No. 3 of 2020 concerning Amendments to Law No. 4 of
2009 concerning Mineral and Coal Mining. Moreover, for the effectiveness of the
implementation of this relaxation policy, a basis for regulation and
implementation of supervision is also needed, especially from the aspects of
share divestment and re-investment.
Meanwhile, the
pro-policy stance of relaxation of share ownership is based more on pragmatic
rationality and economic approach. Among them, relaxation policy will increase
foreign investor interest which is expected to accelerate national economic
recovery. In this case, the potential of mineral and coal mining resources can
be maximally managed and utilized. With the entry of more foreign investors,
there is an increase in the country's foreign exchange income through taxes,
PNBP, and mining royalties. There is also an increase in labour absorption from
the community around the mining circle and from outside the area.
Other concrete
benefits include improving road infrastructure, ports, telecommunication
facilities, education facilities, health services, economic facilities and
trade. In terms of human resources, there are benefits in improving skills and
transferring technology. The rest, what is important from the aspect of
investor interests, is the guarantee of legal certainty and business certainty
and the disappearance of the nominee agreement practice because the instrument
is no longer needed. This needs to be supported by a supervisory mechanism so
that the nominee agreement is no longer used to control more than 51%
(fifty-one per cent) of the shares.
In mining management, good mining practices are
very important to ensure the sustainability of non-renewable natural resources
and prioritize national interests. Because natural resources are God's gift
owned by the Indonesian nation, their management is carried out by the state
for the welfare of the people. However, in the face of economic recovery after
the COVID-19 pandemic, the government must adopt pragmatic policies to support
foreign investment in the mining sector. One of the main obstacles is legal
certainty and inadequate investment security. Therefore, one solution is to
relax restrictions on foreign shareholding temporarily. However, this step must
be accompanied by strict regulation and effective oversight to ensure
compliance and enforcement. Supervision is carried out through monitoring,
controlling, field observation, and evaluation (P3LE) mechanisms, including
supervision of share divestment and dividend reinvestment. Meanwhile, effective
law enforcement of nominee agreement practices in the mining industry can be
done through written reprimands, temporary suspension of activities, and even
license revocation for companies that do not comply with these provisions.
Thus, it is hoped that effective law enforcement can prevent and eliminate
practices that harm the state and society.
In Indonesia's law context, especially in the
mining sector, law implementation is influenced by national economic
conditions, especially when facing the global economic crisis after the
COVID-19 pandemic. This leads to the need for compromising solutions in legal
arrangements, including in the face of foreign investment. Despite normative
prohibitions on nominee agreements, this practice persists within the mining
sector due to the lack of effective enforcement before and after the pandemic. Several
relevant ministries, such as the Ministry of Justice and Human Rights (Kemenkumham), the Ministry of Investment/Investment
Coordinating Board (BKPM), and the Ministry of Energy and Mineral Resources
(ESDM), did not conduct adequate supervision of this practice. Alternatively,
several policies can be considered. The first option is to reduce shareholding
restrictions for foreign investors, for example, by allowing them to own 51% of
the shares for the first 10 years of operation.
Meanwhile, the second option is to maintain the 49%
shareholding limit but allow foreign investors to control the company's
operations. An example is the scheme used in the agreement between the
Indonesian government and PT Freeport Indonesia. In both of these options, it
is important to carry out strict supervision to safeguard the interests of the
state and ensure legal certainty. Through the evaluation and discussion of
various policy alternatives, it is hoped that appropriate and beneficial
solutions can be found for all parties, both foreign investors and countries,
to support the development of a sustainable and profitable mining sector for
both parties.
For Indonesia today, in addition to the need for
legal certainty over the prohibition of nominee agreements on the establishment
of mining business entities, the same legal certainty is also needed at the
operational level. As previously explained, the characteristics of mining
operations that require large capital or high costs allow companies to transfer
share ownership to other parties, both business entities and individuals. If
supervision in the share transfer process is ineffective or weak, there will be
a nominee agreement practice to circumvent foreign share ownership
restrictions. At the operational level, mining companies must divest shares. However,
foreign investors can legally smuggle with nominee agreements due to weak
supervision of the share transfer process and divestment obligations.
Technically, supervision through monitoring, control, field observation, and
evaluation / P3LE of the divestment implementation must be done when the
company starts operations. Attach complete new shareholder data to BO,
including the annual tax return.
Furthermore, routine supervision is carried out
through quarterly reports and the annual RKAB. Periodic supervision is needed
to manage and control the company healthily in accordance with the principles
of Good Corporate Governance, namely transparency/openness, accountability, responsibility/responsibility,
independence / independence, fairness and equality. This is necessary for
mining companies to create justice, and legal certainty in the mining sector to
create benefits with the greatest goal of the prosperity of the people,
especially the communities around the mine. With the background and facts
above, the established companies and operational supervision specifically on
the implementation of share divestment and supervision and monitoring of
dividend re-investment of mining companies. To support the monitoring
mechanism, law enforcement divests shares with the threat of tiered sanctions,
ranging from written reprimands and termination of activities to license
revocation.
CONCLUSION
Based on the preceding analyses, it is evident that while
constitutionally, natural resources (SDA) belong to the Indonesian nation and
are under state control for the benefit of the people, the utilization of
nominee agreements presents challenges to maintaining sovereignty in the
natural resources sector. However, despite these challenges, the use of nominee
agreements by foreign investors is deemed necessary to safeguard their
investments in Indonesia. Hence, strategic policies must be devised, including
potential relaxation of shareholding policies with regular assessments or
imposing restrictions on foreign investors' shareholding under stringent
government oversight. Furthermore, the establishment of effective monitoring
and enforcement mechanisms is imperative to ensure that foreign investments in
the mining sector contribute to the advancement and welfare of the Indonesian
populace.
Adamou,
R., Ibrahim, B., Bonkaney, A. L., Seyni, A. A., & Idrissa, M.
(2021). Niger-Land, climate, energy, agriculture and development: A study
in the Sudano-Sahel Initiative for Regional
Development, Jobs, and Food Security.
Adebayo,
E., & Werker, E. (2021). How much are
benefit-sharing agreements worth to communities affected by mining? Resources
Policy, 71, 101970.
Alamudi, U. A. F., Asikin,
Z., Husni, L., & Munandar,
A. (2022). Ownership of Land by Foreign Citizens in the Implementation of
Foreign Investments with Nominee Deed Before a Notary. International
Journal of Multicultural and Multireligious Understanding, 9(6),
49–60.
Altman,
J., & Smith, D. E. (2018). The economic impact of mining moneys: the Nabarlek case, Western Arnhem Land. Canberra, ACT:
Centre for Aboriginal Economic Policy Research (CAEPR), The ….
Atmadja, I. D. G. (2018). Asas-asas
hukum dalam sistem hukum. Kertha Wicaksana, 12(2),
145–155.
Ayee, J., Soreide, T.,
Shukla, G. P., & Le, T. M. (2011). Political economy of the mining sector
in Ghana. World Bank Policy Research Working Paper, 5730.
Chi, S.,
& Bunker, J. (2021). An Australian perspective on real-life cost-benefit
analysis and assessment frameworks for transport infrastructure investments. Research
in Transportation Economics, 88, 100946.
De Valck, J., Williams, G., & Kuik, S. (2021). Does coal
mining benefit local communities in the long run? A sustainability perspective
on regional Queensland, Australia. Resources Policy, 71, 102009.
Djelantik, I. G. N. S., Budiartha,
I. N. P., & Saripan, H. (2022). The Right on
Land for Foreigner and Foreign Legal Entity Tourism Investasion
Perspective, Participation and Nominee Practice Prevention. Journal Equity
of Law and Governance, 2(1), 69–85.
Hira,
A., & Busumtwi-Sam, J. (2018). Mining community
benefits in Ghana: a case of unrealized potential. A Project Funded by the
Canadian International Resources and Development Institute.
Julyano, M., & Sulistyawan,
A. Y. (2019). Pemahaman terhadap
asas kepastian hukum melalui konstruksi penalaran positivisme hukum. Crepido, 1(1), 13–22.
Koopmans,
C., & Mouter, N. (2020). Cost-benefit analysis.
In Advances in Transport Policy and Planning (Vol. 6, pp. 1–42).
Elsevier.
Masum,
A., & Prihatinah, T. (2023). The Responsibility
of Notary in Making Nominee Agreements for Foreign Citizens in Indonesia. Problems
of Legality, 161, 287–303.
Masur,
J. S., & Posner, E. A. (2018). Cost-benefit analysis and the judicial
role. The University of Chicago Law Review, 85(4), 935–986.
Mouter, N., Dean, M., Koopmans, C., &
Vassallo, J. M. (2020). Comparing cost-benefit analysis and multi-criteria
analysis. In Advances in transport policy and planning (Vol. 6, pp.
225–254). Elsevier.
Pertiwi,
E. (2019). Tanggung Jawab Notaris
Akibat Pembuatan Akta Nominee Yang Mengandung Perbuatan Melawan Hukum Oleh
Para Pihak. Jurnal
Rechten: Riset Hukum Dan Hak Asasi Manusia,
1(1), 41–55.
Putri,
N. C., & Putri, L. Y. (2020). Analisis pembiayaan non-anggaran pemerintah dalam mendukung pembangunan infrastruktur di Indonesia. Jurnal
Infrastruktur, 6(2), 91–103.
Samekto, F. X. A. (2019). Menelusuri
akar pemikiran hans kelsen tentang
stufenbeautheorie dalam pendekatan normatif-filosofis. Jurnal Hukum Progresif,
7(1), 1–19.
Saypan, S., & Nanakorn,
P. (2019). Legal problems concerning nominee arrangement in relation to
foreign business under Thai laws.
Sood, M. (2021). Hukum Lingkungan
Indonesia. Sinar Grafika.
Sumarsih, I. (2023). Foreign Share Ownership Limits
in The Business Field of Mineral and Coal Mining on People’s Welfare. Problematika Hukum, 5(1), 119–134.
Torfing, J., Sørensen,
E., & Røiseland, A. (2019). Transforming the
public sector into an arena for co-creation: Barriers, drivers, benefits, and
ways forward. Administration & Society, 51(5), 795–825.
|
Copyright
holder: Ida Sumarsih (2024) |
|
First
publication rights: International Journal of Social Service and Research (IJSSR) |
|
This article is
licensed under: |