Marred by protests and walkouts by several factions, legislators on Tuesday ended years of deliberation to endorse the contentious mining bill that includes provisions on revising the permit system and advocating a review of all existing contracts.
Under the bill, the permit system will take the form of a license to replace the current contract of work (COW) scheme - something business players have objected to, saying licenses were more easily revoked than a binding contract.
It also stipulates that, while the government will honor the sanctity of all existing contracts, their terms and conditions will be subject to a review to bring them in line with the new rules within a year of the law’s enactment by the president.
The Indonesian Mining Association (IPA), a group of mining firms operating in the country, and the Association of Indonesian Mining Professionals (Perhapi) say the bill is unfriendly to businesses and could hinder investment in the sector.
Mindo Pangaribuan, Freeport Indonesia spokesman, said the U.S.-based mining giant would continue to honor the terms of its current contracts. Newmont Indonesia spokesman Rubi W. Purnomo said the American gold producer would also abide by its existing contracts.
Tuesday’s House session lasted five hours and included two suspensions, as well as interruptions and boycotts by three factions - the National Mandate Party (PAN), the Prosperous Justice Party (PKS) and the National Awakening Party (PKB).
The three objected to an article in the draft bill stipulating the transition period for existing contracts to be revised to suit the new rules.
“We refuse to pass it unless Article 169(A) is struck off,” said the PAN’s Zulkifli Halim, adding the article was unfair and discriminated against local mining companies.
The article states the government will honor existing contracts until their terms expire.
The three factions walked out of the session, leaving the remaining seven factions to endorse the bill and bringing to an end more than three years of deliberations marked by wrangling and bickering among legislators and factions.
Most of the legislators deliberating the bill say they want it to work in favor of small and medium mining projects.
Critics say this idea, while commendable, is motivated only by the fact many of these legislators are affiliated with a number of small and medium mining concessions across the country.
The interests of large mining companies nearly made it into the draft, with articles on the COW initially included. But they were dropped at the very last minute.
Other issues regulated under the bill include a cap on the size and life of mining operations depending on the minerals extracted; and a ban on miners exporting ore after five years.
Energy and Mineral Resources Minister Purnomo Yusgiantoro, representing the government at the House session, said the government hoped the endorsement would at least give industry players a degree of certainty, after a suspenseful wait of more than three years for the bill to be endorsed.
For the bill to take effect, the government will have to issue at least 20 implementing regulations.