Indef Warns: Large Corporations Could Exploit SME Mining Proposals
TEMPO.CO, Jakarta – The Institute for Development of Economics and Finance (Indef) is raising an alarm about the government’s plan to allow small and medium-sized enterprises (SMEs) to manage mining operations. The concern is that without stringent criteria, large corporations could manipulate the system to claim themselves as SMEs and thereby secure mining rights intended for smaller businesses.
Small Companies at Risk of Being Overrun
According to Andry Satrio Nugroho, Head of the Industry, Trade, and Investment Center at Indef, this loophole could allow established corporations to create subsidiaries under the SME category. As a result, these large entities could manage mining lands that were meant for genuine small enterprises.
A Call for Collective Action
Andry recommends that SMEs form cooperatives to collectively manage mining areas. This strategy, he believes, would be more effective than individual SMEs attempting to operate mines alone. Cooperatives could bring economies of scale and better resource management.
Leveraging the SMEs to Legalize Currently Illegal Activities
Currently, many small businesses operate in the mining sector without proper authorization. By integrating SMEs into the legitimate mining business, Andry hopes to formalize these players and bring them into compliance with regulations.
Legislative Body’s Proposal and Its Challenges
The Legislative Body (Baleg) of the House of Representatives proposed these changes. The plan involves giving priority to SMEs for managing mining lands that are less than 2,500 hectares. Universities and public institutions were previously the first to receive mining rights.
The Plenary Session of the House of Representatives approved the Draft Law (RUU) for the Fourth Amendment to Law No. 4 of 2009 on Mineral and Coal Mining (Minerba). The bill is now awaiting further proceedings.
Uncertainty Surrounding the Amendment
However, the Mineral and Coal Mining Bill has undergone four tests in the Constitutional Court (MK). Two of these tests resulted in conditional acceptance. This cumulative open status means the bill’s path to becoming law remains uncertain.
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As the government moves forward with these critical reforms, stakeholder engagement and clear guidelines will be key to preventing exploitation and ensuring the benefits of the mining industry are truly distributed among small businesses. Your thoughts on this matter would be greatly appreciated. Please share your insights in the comments section below.
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