(Feb 18): Indonesia will allow small businesses to manage mines in the commodities-rich country for the first time, and broaden access for religious groups, the latest populist policy to emerge under President Prabowo Subianto in his first months of rule.

Legislators in the Southeast Asian nation’s Parliament, which is dominated by Prabowo’s coalition, on Tuesday passed an amended mining law, giving small and medium enterprises (SMEs) and cooperatives priority access to local mining permits, including for coal and metals. 

“This is for equality,” Energy and Mineral Resources Minister Bahlil Lahadalia, who also chairs the second-biggest political party in Parliament, said after the bill’s passage.

The SMEs and cooperatives will have to be located in the region of a given concession to get the priority treatment, and will be able to secure the permits without going through the traditional auction process, he said. Most concessions in Indonesia have historically been held by companies based in capital Jakarta, he added.

The amendment came as the Indonesian president is seeking to make good on populist pledges in his first months at the helm of Indonesia’s US$1.4 trillion (RM6.2 trillion) economy, including by rolling out a nationwide free-meals programme for students and expanding access to healthcare. 

The permits for SMEs and cooperatives will be non-transferable, given the government’s desire to support new local businesses, Lahadalia added.

Religious organisations will also gain access to metals mines after a policy last year allowed them to secure coal concessions. The earlier move led to the nation’s largest Islamic group taking over a large coal concession in the East Kalimantan province that was previously held by PT Kaltim Prima Coal.

The government plans to issue technical regulations detailing the changes within six months.

Meanwhile, the small businesses’ limited capital and expertise in managing mines will a be factor that hampers policy implementation, according to Irwandy Arif, the chairman of the Indonesia Mining Institute. Policy should instead be focused on ensuring exploration and exploitation are conducted by competent entities, and not to expand access for permits without mitigating the risks, he said. 

More details of the revision: 

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