Indonesia Revokes 32 Regulations in Energy & Mining Sectors

Energy and Mineral Resources Minister Ignasius Jonan briefs the press on revocation of regulations issued by the ministry

JAKARTA (TheInsiderStories) – President Joko Widodo has repeatedly called on his ministers to simplify permits and business process in a move to improve business climate and attract more investment in the country. In response to this call, the Energy and Mineral Resources Ministry on Monday (05/02) revealed its decision to revoke 32 regulations in oil and gas, mineral, coal, electricity and renewable energy.

Minister for Energy and Mineral Resources Ignasius Jonan said the revocation of the regulations was a response to the instruction of the President. “We try to encourage  more investment, therefore helping boosting the economic growth and creating more job opportunities,” he said.

Minister Jonan said out of the 32 regulations, 11 regulations in oil and gas sector were scrapped, 7 in mineral and coal sector, 7 in new and renewable energy and 3 implementing regulations issued by the Special Task Force for Upstream Oil and Gas Business (SKK Migas).

The revocation of the ministry’s regulation appears to be done given the downtrend of investment in the sector over the past few years, in particular in the upstream oil and gas industry.

Based on the ministry’s data, investment in the oil and gas sector has declined from US$20.72 billion in 2014 to US$17.38 billion in 2015, further fell to US$12.74 billion in 2016 and further dropped to only US$9.33 billion in 2017. This means, last year’s investment in the oil and gas sector was only half of the total investment in the sector in 2014.

The decline was mainly driven by the drop of oil price. The complicated business permits and business process in the sector has further discouraged investors and business players to increase their investment in the country.

The Energy and Mineral Resources Ministry has set a target of investment in oil and gas sector at US$17.04 billion in 2018, consisting of US$14.44 billion in upstream oil and gas and US$2.59 billion in downstream oil and gas sector.

The target would be achieved if the government improves business climate in the sector, including by scrapping regulations that are no longer relevant and limits room for business players and investors in expanding their business or invest in new projects.

Among regulations that were revoked is the Ministerial Decree No. 02/1975 and Stipulation Number 1454K/30/MEM/2000 as the two rulings were no longer relevant and they have been replaced by the Ministerial Decree Number 38, 2017 on upstream oil and gas sector and supporting industries.

Minister Jonan said the stipulations that were issued based on the above regulations were also scrapped. The ministry, he said, will continue to simplify regulations issued by the ministry, therefore investors and business players will find it easier in conducting business in Indonesia.

The other regulation that was scrapped is Ministerial Decree Number 8 Year 2005 on Incentives for the Development of Marginal Oil Fields.  The ruling is no longer relevant as the ministry has issued regulation number 8 Year 2017 and its revision Ministerial Decree Number 52 Year 2017.

The ministry also revoked the Ministerial Decree Number 31, Year 2013 on foreign workers working in the oil and gas sector. The foreign workers matters will be regulated by a regulation issued by the Special Task Force for Upstream Oil and Gas, said Acting Director General for Oil and Gas Ego Syahrial.

The other regulations that were revoked is the Ministerial Regulation Number 02/1975 on work safety in pipe distribution and supporting facilities; regulation on incentives for marginal oil fields (Ministerial Regulation Number 008/2005); regulation on fuel for shipping industry (Ministerial Regulation Number 26/2006) and others.

Regulations that were revoked in coal and mineral sector are including the ministry’s regulation number 135.K/201/MPE/1996 on capability of potential investors in mining contractors and ministerial decree number 602.K/008/MPE/1994 on commission for analyzing the environmental impact.