Two weeks ago the ministry passed Decree No. 42/2017 that requires companies to seek approval from the minister and relevant institutions prior to a change in top management along with a partial or full transfer of its participating interests or shares in an energy project.

During a Cabinet meeting at the State Palace last Monday, President Joko “Jokowi” Widodo raised his deep concerns over the issuance of some ministerial decrees, particularly those by the Energy and Mineral Resources Ministry and the Environment and Forestry Ministry, which he considered contradicted efforts to help ease doing business in the country.

Earlier, Jokowi vowed to push up Indonesia’s ranking on the World Bank’s Ease of Doing Business Index to 40th in 2018 from its current 91st.

Catering to the President’s demand, the Energy and Mineral Resources Ministry held a series of meetings with businesspeople to gain insight into the claimed “problematic decrees,” including Decree No. 42.

The ministry’s secretary-general, Teguh Pamudji, told The Jakarta Post on Monday that his office had discussed the issues with relevant stakeholders and reviewed their aspirations.

“Right now, the drafting of the revision [of Decree No. 42/2017] has finished and it will soon be submitted to the minister. The amended decree will be issued within the next one or two days,” he said, but did not specify how the articles would be revised.

Last Thursday, Deputy Energy and Mineral Resources Minister Archandra Tahar said his office would review articles obliging companies to secure approval from the authorities for corporate shake-ups or changes in company shares or participating interests as they were heavily criticized by many businesspeople.

“We will examine input not only about Decree No. 42/2017, but also about all other decrees, so that we can make them better,” Archandra said.

The head of the energy and mineral resources division of the Indonesian Employers Association (Apindo), Sammy Hamzah, said to avert an occurrence that could disrupt the domestic investment climate, the ministry should engage relevant stakeholders intensively during the deliberation of a decree.

“We businesspeople previously put high hopes on Minister Ignasius Jonan and Deputy Minister Arcandra Tahar because they have professional backgrounds without any political affiliation,” Sammy told the Post. “However, we might have fallen short of our expectations. Some policies have been rolled out without intensive communications with us, including one on the gross split scheme.”

Earlier this year, the ministry introduced Decree No. 8/2017 on the gross split scheme for future oil and gas production sharing contracts and, consequently, contractors should pay the costs of exploration and production. It replaces the former cost recovery scheme in which the government reimbursed these costs.

Other controversial decrees include Decree No. 5/2017 and Decree No. 6/2017, which relaxed bans on unprocessed mineral ores and disappointed investors who have already poured their cash into building domestic smelters.

“So, the problems will not be solved by just revising Decree No. 42/2017. There should be systematic efforts to identify all problems faced by investors here. Doing this, we can prevent such regulatory flip-flops that lead to prolonged uncertainties,” said Fabby Tumiwa, the executive director of a Jakarta-based think tank, the Institute for Essential Services Reform (IESR). (dea)

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