MINERAL GOVERNANCE IN HISTORICAL CO

MINERAL GOVERNANCE IN HISTORICAL CONTEXT: KEY DEVELOPMENTS AND PRESSURES

Influences in the development of Indonesia’s Mineral Governance Institutions

Past research suggests that understanding Indonesian min- ing policy requires first recognizing historical influences on mineral governance institutions beginning with colonization and how these have evolved through transitioning patterns of institutional control in rural areas (Erman, 2007; Robinson, 1986). After Dutch colonial authorities introduced a system that gave elites exclusive resource rights and that centralized power in the licensing of minerals, resource governance re- gimes in the post-colonial era continued to centralize licensing power at the state level and prioritized mineral extraction even more emphatically as a national economic strategy (Ballard, 2001; Etemad & Salmasi, 2003). In 1958, the Indonesian Gov- ernment passed Foreign Investment Law No. 78, which sought to boost foreign investment in mining. Following the abortive coup attempt of 1965, the New Order Government under Pres- ident Suharto carried out new sweeping reforms in resource sectors, creating new regimes for mining. In 1966, actions were taken by the Temporary People’s Consultative Assembly (MPRS) by passing Decree No XXIII, reforming economic policies for the purpose of prioritizing extractive industries,

and stressing that capital from abroad must be sought. Based on the decree, two new laws were introduced, Foreign Invest- ment Law No. 1 of 1967 and Mining Law No. 11 of 1967. These laws have since been regarded as decisive influences in Indonesia’s economic history, particularly as foreign develop- ers were strongly encouraged to participate in the minerals sec- tor and granted with the majority of the country’s mineral rights.
The heavy prioritization on foreign investment in Indone- sia—a country that is among the top 10 producers in the world for gold, copper, nickel, and tin—would be continued and even more vigorously championed through structural adjust- ment reforms pursued during financial crisis in the 1990s (Ballard, 2001; Watkins, Kardono, & Saraswati, 2006). While Article 10 of the Mining Law stipulated that development of strategic and vital minerals could be undertaken by private developers appointed by the Minister of Mines and Energy, this often took the form of highly contentious contractual agreements, later named as Contract of Work for minerals (CoW), Coal Contract for coal (CC), and Production Sharing Contract for Petroleum (PSC) (Etemad & Salmasi, 2003). Sig- nificantly, however, for economic and practical reasons, the Minister was also empowered to designate certain limited deposits of strategic minerals for exploitation and authorize the development of other minerals by provincial governments, under a “Mining Authorization” scheme or Kuasa Pertam- bangan (“KP”) (Article 12, Law 11, 1967). The “KP” license allows only the participation of Indonesian individuals or wholly-owned Indonesian companies, and domestic investors were also accommodated through provisions known as “People’s Mining” permits (Aspinall, 2001). 4 Hence, the “indigenous mining sector” became recognized—on paper— as a distinct, legitimate basis for local development insofar as the new code established the principle that Indonesian citi- zens could register to participate directly in mineral extraction activities.
Decades of debate over how to update the Mining Law have seen many arguments surface, primarily through pressures ex- erted by foreign mining companies 5 and NGOs. 6 One of the less commonly publicized arguments for reform is that “indig- enous people are not recognized constitutionally as having any legal rights to mineral deposits” (Watkins et al., 2006, p. 5, my emphasis). Despite the common view that the mineral code should be updated, though, Law No. 11 of 1967 still provided the core legal and technical framework for mining for over four decades, until new reforms finally passed in Parliament in 2009, as discussed later in this article. The 1967 law classi- fied minerals into three groups: Group A—“Strategic Miner- als” (including oil, coal, and tin, among other minerals); Group B—“Vital Minerals” (including iron, copper, lead, gold, and silver); and Group C—minerals not included in either group A nor B (including limestone, sand, and gravel). This classification was altered slightly by Regulation No. 27 of 1980 which stipulated that development of strategic and vital minerals is controlled by the State while the provincial govern- ment is in charge of managing “C” group minerals. Particu- larly for vital and strategic minerals, the authority for their development was vested in the Minister of Mines and Energy, who could assign foreign contractors to conduct developments under CoW agreements. Yet, following the Autonomy Legis- lation passed in 1999, dramatic hopes for the democratization and strengthening of local district-level environmental gover- nance began to permeate the country with various new impli- cations for different sectors (Casson & Obidzinski, 2002; Duncan, 2007; Engel, Lopez, & Palmer, 2006; McCarthy, 2004; Palmer & Engel, 2007); decentralization was widely
viewed as an attempt to “bring government programs closer to the local level, where presumably they are to be tailored according to local needs and conditions” (Li, 2002, p. 275); this shift started to affect the mining sector in new ways. A key change emerged in the form of Government Regulation No. 75 of 2000, which authorized regional governments—at the regency level (Kabupaten)—to issue “KP” (local indige- nous permits) for all minerals. These developments, as the next sections explore, have shaped contemporary challenges con- siderably, setting a stage for major ongoing disagreements over mining and the role of decentralization as coherent, pro-poor, and pro-environment development strategy.

Governing minerals in the post-1999 era: “decentralization,”
rights and controversy

Despite the policies for decentralization, significant confu- sion continues to permeate in regard to whether national or lo- cal authorities can administer the mining rights in a particular region and with regard to the permitting of particular miner- als. Forbes (2007) describes how institutional tug-of-wars cre- ate problems as “the mining industry in Indonesia is burdened by overlapping claims” with “’overlaps of power between the central, regional, and local governments.” Local government officers whom I interviewed in 2007 and again in 2010 argued that KP mineral licenses could be issued independently by Kabupaten without approval from the central government; but this was often disputed by central government agents whom I interviewed, who suggested local governments were prone to a lack of responsible control while letting licenses overlap. Some central government officers suggested that local authorities failed to protect the property of companies from community members who “invaded” the land—an issue that national authorities have often sought to address through the use of police squads, as discussed below. Various stake- holders suggested that unless decentralization processes are clarified, national authorities will never truly relinquish power to lower levels of government for mining. These concerns abundantly confirm and extend further on earlier warnings by researchers who cautioned that the spirit of the Autonomy Laws was being selectively resisted in the extractive sector. Thorburn (2002) articulated this sentiment: “while many deci- sions that directly affect local people’s access to and use of lo- cal forest, land, coastal, and marine resources have been delegated to the districts, the Ministries of Forestry and Min- ing have managed to retain a greater measure of centralized control over their respective realms than most other minis- tries” (p. 621).
Sumule (2002) nonetheless drew a cautiously optimistic out- look on early opportunities of decentralization under the Autonomy Laws and empowerment of indigenous people in mining areas, exploring evolving possibilities through judicial and customary institutions. Contextual knowledge in Indone- sia’s mining sector, however, often leads to the concern that foreign mining companies own large proportions of mineral rights in key geologically rich areas, which prevent local gov- ernments from being able to consider possibilities for giving greater attention to indigenous land claims or re-distributing mineral resource ownership (Wulandari, 2008). 7 Studies of bribery and cronyism in the decentralization era also illustrate how local governments have failed to do their part responsibly in managing mineral resources (Smith, Obidzinski, Subarudi,
& Suramenggala, 2003). Tsing (2005) notes “decentralization of natural resource permits in 2000 spread the possibilities for corruption” and examines political frictions surrounding illegality in Central Kalimantan, noting “illegal resource


192 WORLD DEVELOPMENT

extraction rocketed out of control” (p. 17). Her work also emphasizes how the illegality of small-scale miners’ labor serves multiple exploitative purposes for large corporations, as poorer mineral-seekers “lead company prospectors to the best spots” and then, later on, “the companies displace them.. .and complain about the illegals, blaming them for environmental problems, thus protecting their own reputa- tion” (p. 67). Manus (2005) adds to such concerns by lament- ing that the idea of “indigenous mining rights” remains an illusion, flatly declaring “indigenous mining rights are not rec- ognized by the Indonesian authorities who favor large-scale commercial exploitation over small-scale mining” (p. 2).
Interpretations of macro-economic and political debate about foreign investment provide key overarching lenses through which to understand contentious governance pres- su

Hasil (Bahasa Indonesia) 1:

MINERAL PEMERINTAHAN DALAM KONTEKS SEJARAH: PERKEMBANGAN KUNCI DAN TEKANANInfluences dalam pengembangan lembaga-lembaga pemerintahan Mineral IndonesiaPenelitian sebelumnya menunjukkan bahwa pemahaman min-ing Indonesia kebijakan memerlukan posisi mengakui sejarah influences pada lembaga-lembaga pemerintahan mineral yang dimulai dengan kolonisasi dan bagaimana ini telah berevolusi melalui transisi pola kontrol institusi di daerah pedesaan (Erman, 2007; Robinson, 1986). Setelah pemerintah kolonial Belanda memperkenalkan sebuah sistem yang memberi elit sumber eksklusif hak dan yang terpusat kekuasaan di perizinan mineral, sumber daya pemerintahan re-gimes di era pasca kolonial terus mensentralisasi perizinan kekuasaan di tingkat negara bagian dan diprioritaskan ekstraksi mineral lebih tegas sebagai strategi ekonomi nasional (Ballard, 2001; Etemad & Salmasi, 2003). Pada tahun 1958, Indonesia Gov - ernment berlalu asing investasi hukum No. 78, yang berusaha untuk meningkatkan investasi asing di pertambangan. Setelah gagal kudeta 1965, pemerintah Orde Baru di bawah rezim Suharto Pres-ident dilakukan baru menyapu reformasi di sektor sumber daya, membuat baru rezim untuk pertambangan. Pada tahun 1966, tindakan yang diambil oleh Majelis Permusyawaratan Rakyat sementara (MPRS) dengan melewati Keputusan No XXIII, reformasi kebijakan ekonomi untuk memprioritaskan industri ekstraktif, dan menekankan bahwa modal dari luar negeri harus dicari. Berdasarkan keputusan, dua undang-undang baru yang diperkenalkan, Foreign Invest-ment undang-undang No. 1 tahun 1967 dan Undang-Undang pertambangan No. 11 tahun 1967. Undang-undang ini telah sejak telah dianggap sebagai influences yang menentukan dalam sejarah ekonomi Indonesia, khususnya sebagai asing mengembangkan-ers yang kuat didorong untuk berpartisipasi dalam mineral sec-tor dan diberikan dengan mayoritas hak mineral negara.Memprioritaskan berat pada investasi asing di Indone-sia — negara yang antara produsen top 10 di dunia untuk emas, tembaga, nikel dan timah — akan terus dan bahkan lebih keras diperjuangkan melalui struktural menyesuaikan-ment reformasi mengejar selama krisis financial pada 1990-an (Ballard, 2001; Watkins, Kardono, & Saraswati, 2006). Sementara pasal 10 hukum pertambangan ditentukan bahwa pengembangan mineral strategis dan penting bisa dilakukan oleh pengembang swasta yang ditetapkan oleh Menteri Pertambangan dan energi, hal ini sering mengambil bentuk perjanjian kontrak yang sangat diperdebatkan, kemudian bernama sebagai kontrak karya untuk mineral (sapi), kontrak batubara untuk batubara (CC), dan produksi berbagi kontrak untuk minyak (PSC) (Etemad & Salmasi2003). SIG-nificantly, namun, untuk alasan ekonomi dan praktis, Menteri juga diberdayakan untuk menetapkan tertentu terbatas deposit mineral-mineral strategis untuk eksploitasi dan otorisasi perkembangan mineral lain oleh pemerintah provinsi, di bawah "Pertambangan izin" skema atau Kuasa Pertam-bangan ("KP") (Pasal 12, 11 hukum, 1967). Lisensi "KP" memungkinkan hanya partisipasi Indonesia individu atau milik perusahaan Indonesia, dan investor domestik juga ditampung melalui ketentuan-ketentuan yang dikenal sebagai "Pertambangan rakyat" izin (Aspinall, 2001). 4 karena itulah, "pertambangan sektor adat" menjadi diakui — pada kertas — sebagai berbeda, sah dasar untuk pembangunan daerah sejauh kode baru didirikan prinsip bahwa Indonesia citi-zens bisa mendaftar untuk berpartisipasi langsung dalam kegiatan ekstraksi mineral.Decades of debate over how to update the Mining Law have seen many arguments surface, primarily through pressures ex- erted by foreign mining companies 5 and NGOs. 6 One of the less commonly publicized arguments for reform is that “indig- enous people are not recognized constitutionally as having any legal rights to mineral deposits” (Watkins et al., 2006, p. 5, my emphasis). Despite the common view that the mineral code should be updated, though, Law No. 11 of 1967 still provided the core legal and technical framework for mining for over four decades, until new reforms finally passed in Parliament in 2009, as discussed later in this article. The 1967 law classi- fied minerals into three groups: Group A—“Strategic Miner- als” (including oil, coal, and tin, among other minerals); Group B—“Vital Minerals” (including iron, copper, lead, gold, and silver); and Group C—minerals not included in either group A nor B (including limestone, sand, and gravel). This classification was altered slightly by Regulation No. 27 of 1980 which stipulated that development of strategic and vital minerals is controlled by the State while the provincial govern- ment is in charge of managing “C” group minerals. Particu- larly for vital and strategic minerals, the authority for their development was vested in the Minister of Mines and Energy, who could assign foreign contractors to conduct developments under CoW agreements. Yet, following the Autonomy Legis- lation passed in 1999, dramatic hopes for the democratization and strengthening of local district-level environmental gover- nance began to permeate the country with various new impli- cations for different sectors (Casson & Obidzinski, 2002; Duncan, 2007; Engel, Lopez, & Palmer, 2006; McCarthy, 2004; Palmer & Engel, 2007); decentralization was widelymelihat sebagai upaya untuk "membawa program pemerintah lebih dekat ke tingkat lokal, dimana kemungkinan mereka akan disesuaikan sesuai kebutuhan lokal dan kondisi" (Li, 2002, MS 275); pergeseran ini mulai affect sektor pertambangan cara baru. Perubahan kunci muncul dalam bentuk Peraturan Pemerintah No. 75 tahun 2000, yang resmi pemerintah daerah — di tingkat kabupaten (Kabupaten) — untuk masalah "KP" (indige-nous lokal izin) untuk semua mineral. Perkembangan ini, sebagai mengeksplorasi bagian selanjutnya, telah membentuk tantangan kontemporer con-siderably, menetapkan panggung untuk utama perselisihan yang berkelanjutan atas pertambangan dan peran desentralisasi sebagai koheren, berpihak pada masyarakat miskin, dan berpihak pada lingkungan pengembangan strategi.Mengatur mineral di era post-1999: "desentralisasi,"hak dan kontroversiDespite the policies for decentralization, significant confu- sion continues to permeate in regard to whether national or lo- cal authorities can administer the mining rights in a particular region and with regard to the permitting of particular miner- als. Forbes (2007) describes how institutional tug-of-wars cre- ate problems as “the mining industry in Indonesia is burdened by overlapping claims” with “’overlaps of power between the central, regional, and local governments.” Local government officers whom I interviewed in 2007 and again in 2010 argued that KP mineral licenses could be issued independently by Kabupaten without approval from the central government; but this was often disputed by central government agents whom I interviewed, who suggested local governments were prone to a lack of responsible control while letting licenses overlap. Some central government officers suggested that local authorities failed to protect the property of companies from community members who “invaded” the land—an issue that national authorities have often sought to address through the use of police squads, as discussed below. Various stake- holders suggested that unless decentralization processes are clarified, national authorities will never truly relinquish power to lower levels of government for mining. These concerns abundantly confirm and extend further on earlier warnings by researchers who cautioned that the spirit of the Autonomy Laws was being selectively resisted in the extractive sector. Thorburn (2002) articulated this sentiment: “while many deci- sions that directly affect local people’s access to and use of lo- cal forest, land, coastal, and marine resources have been delegated to the districts, the Ministries of Forestry and Min- ing have managed to retain a greater measure of centralized control over their respective realms than most other minis- tries” (p. 621).Sumule (2002) tetap menarik pandangan optimis out pada awal peluang desentralisasi di bawah undang-undang Otonomi dan pemberdayaan masyarakat adat dalam area pertambangan, menjelajahi kemungkinan berkembang melalui lembaga-lembaga peradilan dan adat. Kontekstual pengetahuan dalam sektor pertambangan Indone-sia, namun sering mengarah ke kekhawatiran bahwa perusahaan pertambangan asing memiliki proporsi besar hak mineral di bidang geologis kaya utama, yang mencegah gov-ernments lokal mampu mempertimbangkan kemungkinan untuk memberikan perhatian yang lebih besar untuk klaim tanah adat atau mendistribusikan ulang kepemilikan sumber daya mineral (Wulandari, 2008). 7 studies penyuapan dan musnah dalam era desentralisasi juga menggambarkan bagaimana Pemda telah gagal untuk melakukan bagian mereka bertanggung jawab dalam mengelola sumber daya mineral (Smith, Obidzinski, Subarudi,& Suramenggala, 2003). Tsing (2005) catatan "desentralisasi izin sumberdaya alam pada tahun 2000 menyebar kemungkinan untuk korupsi" dan memeriksa politik friksi sekitar ilegalitas di Kalimantan Tengah, mencatat "sumberdaya secara ilegal PERKEMBANGAN DUNIA 192 extraction rocketed out of control” (p. 17). Her work also emphasizes how the illegality of small-scale miners’ labor serves multiple exploitative purposes for large corporations, as poorer mineral-seekers “lead company prospectors to the best spots” and then, later on, “the companies displace them.. .and complain about the illegals, blaming them for environmental problems, thus protecting their own reputa- tion” (p. 67). Manus (2005) adds to such concerns by lament- ing that the idea of “indigenous mining rights” remains an illusion, flatly declaring “indigenous mining rights are not rec- ognized by the Indonesian authorities who favor large-scale commercial exploitation over small-scale mining” (p. 2).Interpretations of macro-economic and political debate about foreign investment provide key overarching lenses through which to understand contentious governance pres- su