[FKP at Article 33] A Political Economy of Re-centralization in Indonesia’s Resource Sector


Eve Waburton (ANU) was the speaker at the first FKP hosted by held by Article 33 on 8 July 2015. The topic of Eve’s presentation was the recent law on local government (UU No 23 Year 2014 Tentang Pemerintahan Daerah) which revoked the local government’s (i.e. districts and municipalities) authority to issue mining license (or Izin Usaha Pertambangan [IUP]) and allocated these authorities to the provincial and central governments. Eve’s presentation included a discussion of the transformation of law which governed mining license issuance. At the beginning, UU No. 22/1999 postulates that the authority to manage natural resource fall in regional governments. Then it’s further detailed by PP 75/2001 and 2009 mining law that, indeed, local leaders have the authority to issue IUP within their borders. Then UU No. 23/2014 moved the authority to provincial and central governments. This change was due to two group of reasons, according to Warburton: technical reasons (e.g. difficulties for central government to monitor over 500 districts, environmental issue, etc.) and political reasons (i.e. reasserting central government control and monitoring over local governments).

Eve then raised the question of why, in contrast with previous experience, local governments did not fight harder for their authority to issue mineral and coal mining licenses, especially since authority supposedly had given political benefits to local.

The first explanation was because the land for mining has mostly been allocated. Up until last year, Indonesia has released over 10,000 of mining licenses, over 8,000 of which were from local leaders. This explosion of IUP was driving land occupation for mining. Further issuance of permit without problems, (e.g. overlapping land use) would be hard, if even possible. Stronger Corruption Eradication Commission (KPK) also took part in affecting local leaders’ behavior. Warburton presumed local leaders are afraid to be prosecuted by the KPK if they were found misusing or even mismanaging the authority. Hence, it will be better for local leaders to not have such risky authority. It also possible that their silence now is because they are preparing a submission to the Constitutional Court to review the law in order to take back their power in the near future.

Watch the video: Part 1, Part 2

FKP 2015 08 07 Warburton Recentralization of Indonesia Resources Sector

Reported by Bayu Tegar Perkasa