Greenpeace, JATAM, ICW Released Reports Relating to Corruption in the Coal Sector in Jakarta - Photo: Privacy

JAKARTA (TheInsiderStories) – The coal mining sector has become a political commodity and funding source for political campaigns in Indonesia for the past 20 years, both at the national and regional levels.

The close relationship between government policies and regulations, royalties, taxes, and government infrastructure, has heavily exposed the sector to political corruption. Key players in the coal industry will play an important role in the 2019 presidential election, both in the Joko Widodo – Ma’ruf Amin and Prabowo Subianto – Sandiaga Uno couples.

Even at the local level, decentralization has enlarged the expansion of coal oligarchs, allowing them to make alliances in the form of regional election funding. The Corruption Eradication Commission (CEC) and civil society organizations noted that after the mining permits, elections experienced a significant increase.

This is vividly illustrated in a recent report released by Greenpeace, Auriga, Mining Advocacy Network (JATAM), and Indonesian Corruption Watch (ICW), on Monday (12/17) in Jakarta. According to them, there are political elites with large conflicts of political interest in the coal business.

For an example, the Coordinating Minister for Maritime Affairs, Luhut Binsar Pandjaitan, who oversees the mining and energy sector, is a shareholder of coal miner PT Toba Sejahtera Tbk (IDX: TOBA). The company has a number of subsidiaries involved in coal mining and power plants.

Several other politically-exposed peoples are connected to this business group, including members of the Panjaitan family, former ministers, high-ranking officials, and retired generals. Other elites who have united their political activities with the coal business included Aburizal Bakrie with PT Bumi Resources Tbk (IDX: BUMI) and Subianto with the Nusantara business group.

With the merger, elites tended to use the old structure of political oligarchy: the presidential palace, the military and political parties, especially the Golkar party. They also use a new landscape that is decentralization by working with elites in the region.

In the Golkar party, Panjaitan himself is related to Bakrie, Idrus Marham, Aziz Syamsuddin, Syaukani Hasan Rais, and Rita Widyasari. He is also associated with the nickel industry project in Morowali, Central Sulawesim called Morowali Industrial Park.

Our law requires employers in the mining sector to disclose the legal owner of the company as registered with the Ministry of Law and Human Rights. However, these owners maneuvered by hiding their involvement, for example with share ownership given to their families or cronies.

The new alliance between national elites and regional elites in the coal business has been a new landscape where decentralization makes the decision-making process more political and increases the discretionary power of regional officials. And, both of these increase the risk of corruption, said Tata Mustasya, head of the Climate Campaign and Energy Greenpeace Southeast Asia early this week.

It is alleged that the coal sector has funded and simultaneously polluted politics and democracy in Indonesia, to the detriment of the Indonesian people. Corruption occurs systemically-structurally through regulatory arrangements, licensing processes, political policies.

There are several factors that increase the risk of corruption in each stage of the mining process. Weaknesses in the corruption prevention system, also in the judicial aspects generally reduce the ability of the government to be able to detect, prevent and punish corruptors effectively.

Highly politicized decision-making processes and discretionary powers held by state officials also increase risk factors for corruption. Another factor is that governance in the mining sector often does not have a clear division of roles and responsibilities.

This was confirmed by Firdaus Ilyas from ICW. According to him, poor supervision makes the management of Indonesia’s natural resources, especially coal, vulnerable to corruption. Weak law enforcement has made the coal business become a source of businessmen and rulers.

In terms of the economy, State revenues from coal are nothing compared to the environmental impacts and interests of future generations. Therefore, it is time for us to break away from dependence on coal.

On the other hand, the coordinator of JATAM, Merah Johansyah, emphasized that through political corruption, regional elections and elections only became an arena to seize power and position and gain wealth.

This five-yearly democratic party is also an opportunity for coal business people to practice political bondage to get political guarantees to perpetuate their business in the region. Moreover, politicians and coal businessmen are in the two candidates for the 2019 presidential election.

According to the CEC’s report, around 20-30 billion political costs of a regional election even though on paper are said to have a nominal value of Rp5 billion (US$344,827.59). There are fund suppliers from the business elite for political contestation. The impact is broad on our democracy.

Environmental issues in several periods of the presidency (also regional heads) were almost never a strategic issue because they had been politicized by the elites behind the candidates.

Political corruption through collusion between politicians and coal businessmen has caused people to face the various problems caused by this dirty industry. Starting from land evictions, customary land grabs, criminalization, food and water crises, health threats, acts of violence by state apparatus, and mine pit also caused children to be killed.

Indonesia has earned the nickname “the dirty man of Asia” because of its dependence on the coal industry sector. Instead of reducing the number of production to 413 million tons in 2017 as planned, coal production actually rose to 477 tons in 2018.

Coalruption has and is destroying Indonesia’s welfare. This practice pollutes the environment, is deadly, damages reputation and undermines Indonesian democracy through the practice of political corruption.

Political corruption in the coal sector must end with us not being so dependent on these commodities for a better future for Indonesia. It is now clear that Indonesia is getting clean from this dirty industry and focusing on developing renewable energy sector industries.

US$1: Rp14,500

Written by Daniel Deha, Email: