On October 16, 2023, the President of Republic of Indonesia issued Presidential Regulation No. 70 of 2023 on Land Allocation for Investment Arrangement ("PR 70/2023"). As a background, PR 70/2023 was issued based on the awareness of the Government to increase the effectiveness and efficiency in the utilization of resources for equal investment and public welfare. Further, the Government intends to realize the land allocation distribution in the mining, plantation, and forest sectors for village-owned enterprises, region-owned enterprises, business entities owned by social organizations, cooperatives, and small and medium-size enterprises.

We set out below the key provisions of PR 70/2023.

Key Definitions

It is important to note several definitions provided under the PR 70/2023, as follows:

  1. The Task Force for Land Use Arrangement and Investment Arrangement is defined as a task force established by the President of Republic Indonesia in order to arrange the fair land use, arrangement of business licensing for mining, plantation, and forest sector, as well as to increase the effectiveness and efficiency to optimize the utilization of natural resources (the "Task Force").
  2. Land is defined as land area designated for mining activities and concession of the utilization of forest or plantation areas.
  3. The Sector Supervisor (Pembina Sektor) is defined as the Ministers who organize the government affairs in the (i) energy and mineral resources, (ii) environmental and forestry, (iii) plantation, and/or (iv) agrarian/land and spatial planning.

Duties of Task Force

Article 2(1) of PR 70/2023 stipulates that the duties of the Task Force are, among others:

  1. Mapping the use of the land for mining, plantation, and forest utilization activities as a result of the change/revocation of business licensing and concession permits in the forest area;
  2. Provide the recommendation to the minister/head of agency that administers the Government affairs in the field of investment/coordination on capital investment (Kepala Badan Koordinasi Penanaman Modal or the "Head of BKPM") to carry out the revocation of business licensing for the mining, plantation as well as concession permits in the forest area; and
  3. Carry out Land classifications and determine fair allocations of Land in an effort to provide benefits for public welfare.

Evaluation of Implementation of Business Activities by Sector Supervisor

Article 3(1) of PR 70/2023 provides that the Sector Supervisor shall carry out an evaluation of the business actors on their business licenses in mining, concession permits in the forest area, or plantation sector in accordance with their relevant business licenses. The Sector Supervisor carries out the evaluation of the implementation of business activities on the following factors, among others:

  1. Realization of the implementation of business activities in accordance with the purpose of business licenses;
  2. Completeness of the basic requirements and other relevant licenses and/or concession permits; and/or
  3. Suitability of the implementation of business activities with the Land designation.

Based on the above evaluation, pursuant to Article 3(3) of PR 70/2023, the Sector Supervisor shall convey the evaluation report to the Task Force to make changes to the business licenses relating to the reduction of Land area, revocation of business licenses, and/or revocation of concession permits in the forest area.

According to Article 3(4) of PR 70/2023, thereafter, the Task Force shall convey its recommendation to the Head of BKPM to (i) make changes to the business licenses relating to the reduction of Land area; (ii) revoke the business licenses; and/or (iii) revoke the concession permits in the forest area. As for the use of the Land, the Task Force shall convey the recommendation on the deletion of the rights of the land to the minister that administers government affairs in the agrarian/land and spatial planning sector (the "Minister of Agrarian Affairs").

In light of the above, in accordance with Articles 3(6) and (7) of PR 70/2023, based on the recommendations from the Task Force, the Head of BKPM shall issue the decree letter(s) on the change of business licenses relating to the reduction of the Land, revocation of the business licenses, and/or the revocation of concession permits in the forest area. As for the Minister of Agrarian Affairs, after receiving the recommendations from the Task Force, the Minister of Agrarian Affairs shall delete the rights of the land in accordance with the prevailing laws and regulations.

Classifications of Utilization and Allocation of Land

After the evaluation as elaborated above, in accordance with Article 4(1) of PR 70/2023, the Task Force shall conduct the classifications of the utilization and allocation of the Land. Article 4(4) of PR 70/2023 stipulates that the Land classifications includes (i) the economical potentials, or the natural wealth contained therein; (ii) suitability of the spatial planning with the business activities; (iii) land capacity and environmental protection. Further, based on Article 4(5) of PR 70/2023, the re-allocation of the Land shall be given to the following business actors:

  1. village-owned enterprises;
  2. region-owned enterprises;
  3. business entities owned by social organizations;
  4. cooperatives;
  5. small and medium-size enterprises; or
  6. large enterprises.

Allocation of Land for Mining Activities

Based on Article 5(1) of PR 70/2023, based on the classifications of the utilization and allocation of Land, the Sector Supervisor (i.e., the Minister of Energy and Mineral Resources) delegates its authority to determine, offer, and grant Mining Business Permit Areas (Wilayah Izin Usaha Pertambangan or "WIUP") to the Head of BKPM. Please note that according to Article 5(2) of PR 70/2023, the authority to determine, offer, and grant the WIUP by the Head of BKPM is for the Land derived from the revocation of business licenses before PR 70/2023 is issued. Based on such WIUP, the Head of BKPM conducts an offer and grants the WIUP to the business actor(s). Thereafter, in accordance with Article 5(4) of PR 70/2023, after receiving the WIUP, the business actor shall apply for Mining Business Permit (Izin Usaha Pertambangan or an "IUP") through the OSS system.

Allocation of Land for Concession Permits in Forest Areas

Based on Article 7(1) of PR 70/2023, the concession permits in the forest areas include (i) the approval of the forest utilization (persetujuan penggunaan kawasan hutan); (ii) the approval of the forest area relinquishment (persetujuan pelepasan kawasan hutan); (iii) the business license of forest utilization; and/or (iv) the business license for the provision of natural tourism facilities (izin usaha penyediaan sarana wisata alam). Article 7(2) of PR 70/2023 further stipulates that the Sector Supervisor (i.e., the Minister of Environment and Forestry) delegates its authority to issue the determination of forest area direction map (peta arahan kawasan hutan or the "Forest Area Map") and investment arrangement on the Land that has been reduced or revocation of concession permits in forest area to the Head of BKPM.

In accordance with Article 7(3) of PR 70/2023, based on the Forest Area Map and the investment arrangement, the Task Force shall offer the available Land in the forestry sector to business actors. Pursuant to Article 7(4) of PR 70/2023, for a business actor who is interested in the offer of available Land in the forestry sector, the Task Force shall evaluate such business actor based on certain aspects, namely, (i) the potential land area; (ii) completeness of administrative/management requirements; (iii) technical aspect and environmental management; and (iv) financial support. Further, if the business actor fulfils the requirements, the business actor shall apply for the concession permits through the OSS system.

Allocation of Land for Plantation Activities

According to Article 8(1) of PR 70/2023, the Head of BKPM shall determine the availability of the Land in the plantation area that may be allocated to business actors. Thereafter, the Task Force shall offer based on such available Land to business actors. Under Article 8(3) of PR 70/2023, for a business actor who is interested in the offer, the Task Force shall evaluate such business actor based on the same aspects as the concession permits in forest areas (please see the aspects in the allocation of land for concession permits in forest areas' section above). If the business actor fulfils the requirements, the business actor shall apply for conformity of space utilization activities (Kesesuaian Kegiatan Pemanfaatan Ruang or an "KKPR") through the OSS system, and the Minister of Agrarian Affairs shall issue the KKPR through the OSS system. Thereafter, the business actor shall apply for the application of the rights of the land to the Minister of Agrarian Affairs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.