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reat news for the mining industry, which has been in turmoil since the 2009 Mining Law devolved the licensing of mining concessions outside the oil and gas industry from the central government to regional administrations.

The new law on regional administrations approved by the House of Representatives on Sept. 29 restores the authority to license mines to the central government.

However, this good news has been virtually ignored, overwhelmed by the noisy public protests and criticism of the new Regional Elections Law that ends the direct elections of regional leaders, reinstating the Soeharto-era mechanism of indirect elections by regional legislative councils.

A combination of inadequate institutional capacity, greed and corruption has resulted in the issuance of thousands of overlapping mining concessions that contravene other laws, especially those regarding forestry and the environment.

In the less than five years since licensing authority was devolved to regional administrations, more than 8,800 mining concessions, mostly for coal, have been issued across the country. But many of them are legally flawed, breaching other laws '€” especially forestry laws.

Many regents and provincial governors have used their mine licensing authority as a private cash cow to fund their election campaigns. The directorate-general of mining said last week that it was still reviewing 4,000 mining licenses to ascertain whether they were legally and environmentally clean and clear. The Mining Law that was issued a few months before the 2009 general election considered devolving the mine-licensing authority to regional governments the best way of ensuring that natural resources were managed to serve the interests of local people. But it seems to have failed miserably to achieve that goal.

 Many analysts have raised the questions as to whether the decentralization of mining permits mostly is truly in compliance with the 33rd Article of the Constitution: which stipulates that the land, the waters and the natural resources within shall be used to the greatest benefit of the people.

Worse still, the chaos in the mining industry caused by corrupt regional leaders has dragged the central government into messy litigation at international arbitration councils.

The Corruption Eradication Commission (KPK) revealed in April that gross mismanagement, an acute lack of oversight and massive tax evasion within the coal mining industry had caused more than US$2.2 billion in potential tax losses as well as severe damage to the environment.

Eight months of research and field studies by the KPK into the coal mining industry revealed that 25 percent or 725 of the 3,826 coal mining licenses issued by regional administrations (mostly in Kalimantan and Sumatra) did not have taxpayer registration numbers.

However, since the 2009 Mining Law has yet to be amended, it could be another year or two before the new mine licensing mechanism can be implemented. Moreover, a number of government regulations and ministerial decrees have yet to be issued on the technical details of the new licensing system.