The chaos in the issuance of mining license has caused various adverse impacts, such as problematic permits, overlapping land uses, environmental damage, to tax evasion.
Like a double-edged sword, the regional autonomy policy starting in 2001 has brought blessings, as well as disasters. On the one hand, the euphoria of regional autonomy that spread during the reform era has had a positive impact, such as competing to develop regional potential and increasing independence in managing the economy and developing their respective regions.
However, on the other hand, the euphoria of regional autonomy has caused a disaster for coal management. Since the central government has handed over mining business permits to local governments, licensing has become easy to obtain. Moreover, the development of coal commodity prices, which was booming, made regional leaders’ spirit selling out permits even more intense.
“The mining business license is on sale. Local governments are competing to grant mining permits,” said Bambang Brodjonegoro, when he was appointed as Acting Head of the Fiscal Policy Agency, Ministry of Finance in 2012. The number of mining licenses (IUP) has jumped drastically. In 2001, the number of mining license was still 750 licenses, but in 2009 it had jumped 13 times to more than 10 thousand mining licenses.
The Publish What You Pay (PWYP) report Indonesia dubbed the 2001-2009 period as a dark period in the mining sector. It is a time of chaos as extractive industries are managed haphazardly. The mining sector is overgrowing without being closely monitored, either by the central government or the provincial government.
The impact of this messy governance in the granting of mining permits is, of course, enormous. Not only problematic licensing spreads but also the issue of overlapping land use. The harmful impact on the environment because many holes left from coal mining are left gaping and tax avoidance.
In the context of problematic licensing, the Corruption Eradication Commission (KPK) suspects that the mining licenses’ issuance was followed by rampant bribery and gratuities. The indication is simple. There are many problematic licenses. The report on the results of a study conducted by the Corruption Eradication Commission (KPK) coordination and supervision team in the mining sector found that out of 10,348 licenses, there was 3,982 problematic licenses non-clean and clear (Non-CNC) status. It means that only 61.5 percent of mining licenses are eligible to operate.
Likewise, with overlapping licenses. The widespread granting of coal mining licenses that did not comply with procedures resulted in overlapping land uses. The mining licenses granted by the local government for coal mining areas are located in conservation and protected forest areas. The proof, as many as 4.9 million hectares of coal mines are in protected forest areas and 1.4 million hectares in conservation forest areas.
The licensing chaos is exacerbated by the number of coal mining companies that are not administratively orderly. The company’s address is unclear, and the company’s low commitment in allocating post-mining reclamation funds is an example of many cases. The Corruption Eradication Commission (KPK) noted that 90 percent of mining companies do not pay their obligation to rehabilitate mining areas. “Then where did the money go?” said Corruption Eradication Commission (KPK) Deputy Chairman Laode Muhamad Syarif.
Therefore, it is not surprising that the impact of environmental damage is spreading due to the poor governance of coal mines, for example, in East Kalimantan. In this province, 264 coal mine pits have been left gaping without being reclaimed by the managing company. As a result, no less than 27 children died in these dangerous mine pits.
Another harmful effect of chaotic mining governance and weak supervision is the ease with which mining company owners avoid taxes. Based on the Corruption Eradication Commission (KPK) data, of the 7,839 mining license holders, 24 percent or 1,850 do not have a taxpayer identification number (NPWP). Meanwhile, of the total mining license holders with a taxpayer identification number (NPWP), 35 percent do not report their Annual Tax Return (SPT) or do not pay taxes. Therefore, the Corruption Eradication Commission (KPK) noted that in 2016, the mining industry had receivables from the state amounting to Rp 23 trillion.
Based on the various findings and the negative impacts caused by chaos in mining governance and licensing, the Corruption Eradication Commission (KPK) study provides many recommendations for improving Indonesia’s coal governance. First, controlling problematic mining areas (Non-CnC) and mining license located in conservation and protected forest areas. Second, curbing the Presidential Regulation on the moratorium on mining permits will be no more issuance of new mining licenses until all problematic licenses have resolved their problems.
Third, the Corruption Eradication Commission (KPK) asks the government to revitalize and develop a licensing database integrated with the one map policy that applies nationally, and the company registration system uses a single identity. Fourth, the Corruption Eradication Commission (KPK) recommends improving the mineral and coal mining sector’s licensing mechanism at the central and regional levels that are integrated nationally.
Fifth, to collect non-tax state revenue receivables (PNBP) and taxes, the Corruption Eradication Commission (KPK) coordinates with local governments. The Corruption Eradication Commission (KPK) asks the regional government to oblige Taxpayers Identification Number (NPWP) in mining production areas. The Corruption Eradication Commission (KPK) also asked the Director-General of Sea Transportation, Ministry of Transportation, not to issue sailing orders for mining licenses that have not paid off their financial obligations.
Based on several of the Corruption Eradication Commission (KPK) recommendations, the Ministry of Energy and Mineral Resources then issued the Minister of Energy and Mineral Resources Regulation Number 43 of 2015 concerning Evaluation Procedures for mining license issuance. Previously, the government had implemented a moratorium or temporary suspension of mining permits. From 2014 to April 2017, it was recorded that 776 coal mining licenses were revoked, with 3.6 million hectares.
The remaining coal mining licenses until April 2017 reached 2,966 licenses. Of this number, around 52 percent are known to have expired in December 2016. The rest, namely 1,405 Mining Licenses, are still active. However, as many as 217 permits still have Non-CNC mining license status. “Regarding licenses that are still problematic, the government must immediately regulate these permits,” said the National Coordinator of PWYP Indonesia, Maryati Abdullah.
Besides, the Ministry of Energy and Mineral Resources is also trying to fix overlapping land uses by launching an integrated map system called ESDM One Map. Through this map in the form of a portal, the public can access various geospatial data on Indonesia’s energy and mineral resources sector online.
Some information is presented in the program: the geological potential ranging from minerals, coal, geothermal, solid bitumen, methane gas, and coal (Coal Bed Methane / CBM). Besides, there is also data on mining license areas, oil and gas working areas, and geothermal working areas. One map also contains data on forest areas and electricity information, including power plants, substations, transmission networks, and distribution networks.
This One map has been connected to Minerba One Map Indonesia (MOMI), built by the Directorate General of Mineral and Coal. With this map, provincial and district governments can see mining business permits in their respective areas so that the government can avoid overlapping among Mining License holders.
With these various mining governance reforms, the Corruption Eradication Commission (KPK) hopes that Indonesia’s natural resources can be managed much better. Indonesia is the five largest coal producers globally, with an average production of 440 million tons per year with proven reserves of 13.3 billion tons