JAKARTA, KOMPAS.com – Indonesia’s mining governance continues to face fundamental weaknesses that could hinder downstream mineral industrialization while reducing the global competitiveness of Indonesian products.
This is reflected in the latest Resource Governance Assessment (RGA), which found that governance performance remains weak in licensing, transparency, and accountability.
According to the assessment, the licensing and taxation component scored 52 out of 100. More specifically, the Resource Governance Index (RGI) recorded a score of 41 out of 100 for the licensing subcomponent and 57 out of 100 for taxation.
The RGA is an assessment tool developed by the Natural Resource Governance Institute (NRGI) to evaluate transparency, regulatory availability, and the quality of natural resource governance across countries.
Aryanto Nugroho, National Coordinator of Publish What You Pay (PWYP) Indonesia, said weak upstream governance could threaten the sustainability of downstream investments worth billions of U.S. dollars.
“The upstream sector remains fragile, with a score of only 41. It is difficult to imagine downstream industries attracting billions of dollars in investment when they are built upon a weak licensing system and fragile fiscal governance,” Aryanto said in Jakarta on Wednesday (August 5, 2026).
According to Aryanto, one of the most striking findings of the assessment is the zero score for mining contract transparency, indicating that little progress has been made since the previous assessment in 2017.
Transparency challenges are also evident in the limited public access to Environmental Impact Assessment (EIA/AMDAL) documents.
Aryanto cited a case in East Kutai, where local communities had to pursue legal action all the way to the Supreme Court over a period of more than four years simply to obtain an AMDAL document.
“How can the public effectively monitor the licensing process if it takes more than four years just to access an environmental impact assessment document?” he said.
State-Owned Enterprise Accountability Also Under Scrutiny
The RGA also highlights weak accountability among state-owned enterprises (SOEs) operating in the mining sector.
According to Aryanto, this finding is particularly concerning given the increasingly significant role of SOEs in managing Indonesia’s natural resources through various consolidation policies, including the establishment of Danantara and Perminas.
He stressed that expanding the role of SOEs must be accompanied by stronger transparency and accountability measures to maintain public trust.
“We should not allow natural resource management to become increasingly concentrated in SOEs while governance standards receive the lowest scores. This should serve as a warning to all stakeholders,” he said.
Aryanto argued that weak governance is not merely a domestic issue but could also affect Indonesia’s access to international markets.
Many countries are now placing greater emphasis on environmental, social, and governance (ESG) principles throughout industrial supply chains.
If Indonesia’s governance standards are not strengthened, downstream mineral products—including electric vehicle batteries—could face market barriers, particularly in jurisdictions such as the European Union, which is set to implement the EU Battery Regulation in 2027.
He suggested that the RGA could serve as one of the key references in developing Indonesia’s national ESG standards, particularly on governance.
“I believe the RGA can serve as an important reference, especially for strengthening the governance pillar of Indonesia’s ESG standards, as this remains our weakest area,” he said.
Aryanto also pointed to the continued lack of project-level tax transparency in the mining sector, making it difficult for the public to monitor state revenues generated from extractive industries.
Licensing Digitalization Has Yet to Deliver Greater Transparency
Meanwhile, Hasrul Hanif, a researcher at the Research Center for Politics and Government (PolGov), Faculty of Social and Political Sciences, Universitas Gadjah Mada (UGM), said Indonesia has made progress in modernizing mining governance, particularly through the digitalization of its licensing system.
However, the assessment found that these improvements have not been matched by greater transparency after licenses are issued.
“Through the Minerba Cadastre system, we found relatively strong performance during the pre-licensing process. However, once we move into the post-licensing process, governance performance declines,” Hasrul said.
According to him, these findings demonstrate that governance reform cannot stop at digitalizing licensing procedures. It must also ensure that monitoring, transparency, and accountability are consistently upheld throughout the lifecycle of mining operations.
Source: Kompas