Sunday, February 14, 2010

Probability Foreigners Allowed to own Property in Indonesia

New Hopes within the Entrepreneur relating to the probability of Foreigners to own property in Indonesia. This news emerged as good hopes for the Property Business players in Indonesia. During the Year of 2008 - 2009 according to Rhenald Kasli in Kompas Newspaper of  8 February 2010 there are property owners who are still hit by Crisis. However, if it is open according to the Minister of Peoples Housing there will be Foreign Investment coming in to Indonesia in the amount of USD 3 billion - 6 Billion per Year. 

The question which arises is as to whether is it true that Property are attractive for Foreigners and whether this plan is attractive to the business players in Indonesia says Rhenaldi Kasali in his Economic Analysis in Kompas News Paper of 8 February 2010. According to him, The Foreign Buyers of property in Indonesia in fact is not a new issue. In Karawang and Bekasi, West of Jawa there are plenty of Indian and Korean who are staying in said area. They said that they are the owner of such property. However,  from the answer  upon question to the developer,  it shows that such foreigners  which had already stayed for 10 Years is purchasing such property on behalf of the Company according to Rhenald Kasali.


In  Bali there are also many of Properties being build by Italian, French, Australian and Brasil. However, according to Rhenaldi the lands and buildings are on the name of certain person. These are also found in Batam and Bintan, where the owners are from Singapore and HongKong     In the island of Mentawai where the waves are good for surfing,  according to Rhenaldi,  many tourists are staying in the Boats. This is not because it is more comfort but since it is not easy to build or own property whch is suitable for  foreign tourists  who are regularly traveling there. 

If the above are ignored, the state for sure will loose the opportunity to get tax income since there are so much opportunities which are thrown away and loose from attention.

Regulations 

That Foreigners are not prohibited to own  property is actually known. However, according to Rhenaldi, we are used to make rulings which are blocking rather then opening. In the old rulings it is said that

Foreigners who  are allowed to buy property are those " who is domiciled in Indonesia". The words " domiciled in Indonesia" if we further check is more saying "No" then "Yes". Why is in not just shortened to become " Person who are allowed to purchase property. Point ?.

Furthermore according to Rhenaldi, the Right to use is limited only for 25 Years. For buyers which viewed the property as instrument for Investment, this ruling for sure is less attractive if compared with the rulings  applied in other countries within the similar Area. 

In Malaysia and Singapore, they can be provided with 99 Years, there are even being granted the rights for 900 Years. 

Furthermore countries which are desiring for the incmoing of foreign investment, the Property Policy are in line with other Policies, such as imigration, Buisiness Licenses/Permits, citizen status etc. In Indonesia such vision is not yet in line.

" Debottlenecking Mindset"

Rhenaldi says that there are lots of reasons why foreigners are attracted to purchase property in a country. Besides the need of having a place to stay, is for the schooling of their children, health care or medicare, working placement, or trading and also for investing.

There are lots of foreign traders who frequently entry and exit carrying products made in Indonesia to abroad electing to have a house in Indonesia by doing illegal manner rather then staying in the Hotel.
However, on the other side, the property in Indonesia is in fact attractive for Investors in the Asean Region. The pricing of property in Indonesia    in the main roads with the average quality is still ranging 20% of the similar property in Singapore.

Rhenaldi syas that as a comparison the pricing of 5 star Property in Singapore had reached Rp.150 million per square meter. In Indonesia with the same Class maximum  price is only Rp 30 million per square meter. Besides that the increasing price of property is interesting. Thus the potential is there according to Rhenaldi above writing.

For Japanese who had retired, felt that  the expensive living cost in their Country had driven such retired  person to seek for a staying place location in other country. Indonesia is included as the country who they are interested., however they frequently failed to get, resulting they choose Philipine and Thailand.  

The existing experienced shows that there are still " plenty of Bottle necking Mindset" which has to be solved to guide the new Governments Regulation, to enable the incoming of new investments within the property sector says Rhenaldi.

These Bottle necking Mindset is founded in several sectors in the Government, Parliament (DPR and DPRD/The House People Representative), The Chamber of Commerce and Industry ( Kadin), the entrepreneurs, and public.

  • Firstly,  the new rules and regulations must be attractive enough by the Investors. The Use Right does not need to added other words which gives the perception that it is just making up something which in unnecessary, for instance it is said " can be extended 2 times each 20 Years after certain Years.
  • Secondly, Bottlkenecking mindset in the elevant department, such as immigration, manpower, financing and banking
  • Thirdly,  Bottlkenecking mindsetblock. This bottlenecking block according  to Rhenaldi are fears or  exesive nationalism, which resulted more of Restriction rather than Boosting -Pushing such as that ideas of limiting foreigners not to allow purchasing property above Rp1.5 milliard, and may only purchase new houses.  
  • The latest mindset is that the worrisome that the need of people to own houses is still high which is 800,000 Unit.  However from the data form Panagian Simanungkalit and Associates shows that new houses which are being built had  reached  only 257.365 Unit in the Year 2010.
    • Rhenaldi syas that we have to understand that the property market in not only determined by " the Need" or the desire to purchase, but also the preparation to buy and the power to purchase.
    • Rhenaldi says that rather than raising about matters which has already  a market mechanisme, why are we not limiting on startegic matters such as prohibition to purchase property in the strtaegic area, border or area which can damage the natural resources. 
    The above are my reading on Rhenaldi Economic Analysis relating to Probability Foreigners Allowed to own Property in Indonesia, as found in the Kompas Newspaper of 8 February 2010.


                 

    Saturday, February 13, 2010

    Running A Business Law Firm


    Well, I have been running this shop of mine which is a Business Law Office for more than 11 1/ 2 Years since 1st June, 1998. The Law Firm specialty depends on the Partner who is running such Firm. Since I was formerly working as In - House Legal Counsel 5 Years in the Oil and Gas Company (formerly owned by Roy M.Huffington) called Vico Indonesia (Huffco Indonesia) who produces LNG as the end product after being refined in Bontang,  and 5 Years as In House Legal Counsel in a Cooper Mining Company (one of the biggest copper mining company in the world) called PT Freeport Indonesia who is operating in Irian or now called Papua, my links and network of friends are within the oil and gas as well as Mining Companies in Indonesia. 


    I was also working for 5 Years as Legal Consultant and Advocate at the Law Office of Adnan Buyung Nasution and 2 Years as Partner at the Law Office of Delma Juzar  & Wiriadinata (Wiriadinata & Widyawan), where  I   experienced providing legal services relating to  corporate business, financing transactions, restructuring loan, insurances,  construction contracts, capital market, shipping, labour matters.

    The significant experiences which I felt was  that I had experienced for more than 11 1/2 Years running my own Law Firm which is now called Suleiman Agung & Co.   since 1 st June 1998,  when Indonesia was hit by the Asian Economic Crisis

    I managed to survive in running this Law Firm for more than 11 1/2 Years. Like selling other services, in the Legal Services field, the Services that you are offering to sell to your Customers or Clients are among others your legal expertise in  giving legal advices on the legal aspects of your Clients business. These includes giving legal advises on the rules and regulations that have to be taken into considerations by your Clients in conducting their business activities in Indonesia.

    For instance if your Client happens to be a foreign investors who is interested in conducting Coal Trade Activities from Indonesia to be exported to outside the country for instance China, since their Industries are growing fast where for running their industry they  might need Coal for fueling their Power Plant to engine their Industry or manufacture to produce their products, than for sure they are in the high need of Coal. Our Customers or Clients are also questioning whether a foreign company is allowed to establish a Mining Company in Indonesia who desires to conduct the Coal Mining activities in Indonesia.  

    Some of the Customers were asking whether a foreign Investor or  foreign Company maybe involved in the Trading of this Coal in Indonesia or  establishing a Coal Mining Company in Indonesia, several questions  may pop up such as : What are the rulings and what are the requirements that must be fulfilled. In order to answer their questions, we as Business Lawyer, have to check on the Rulings of Trading of Coal in the Department of Trade and The Directorate of Coal. We also need to seek on the New  Mineral  & Coal Law No. 4 Year 2009 concerning Coal Trading and Coal Mining activities. 

    We have to check the Size of the Coal Mining Area, the  Location of the Coal  where they want to trade or mine and the Relevant Competent  Authority either Central Level and The Local Regional  level who is authorized to Issue/Grant the Izin Usaha Pertambangan ) Coal Mining Authority/ Business Mining License.  

    As implementation of the Autonomy Law - there is a segregation - Delegation of Authority between the Central Government and the Local Regional Government, where the Ruling may be incorporated in the New Mineral and Coal law No. 4 Year 2009 as well as in the implementation ruling either made by the Central or Local Government.

    We may  need to check whether the Location of the Coal is within 1  Regency, Province or  crossing more than 1 Regency or Province.  We may also need to check the size of  such Coal Mining or Coal Stock Pile. Since foreign investors are involved we also have to check the rulings on Foreign Investors who wants to invest in Indonesia in the Coal Mining Sector.  

    For checking such purpose we have to Check -  the Rules and Law No.4 Year 2009 including checking with The Directorate of Coal and Department of Mine and Energy.  We also need to check with the Local Government Ruling ( Perda) as well as the Rulings from Local Government ( Bupati/Governor) where the Location of the Coal Mining is located. In order to avoid any overlapping  with other activities such as Forestry Conservation or any other activities we have to check with the Bupati and Local Government /Local Forestry Department. 

    If our Client wants to take over or acquire any existing KP we have to check the existing documents possessed or held by the KP holder to know the legality, the size, the Duration period and who had issued such KP. We also need to check the rulings relating to converting KP into IUP either it is already expired  or still on. We  may also need to conduct research upon  the time period for processing the new IUP for  the size of the  coal concesion and whether it is more proper in acquiring  an existing KP or  applying for a new IUP

    We may also notice from several information that there are many uncertain brokers of Coal Trader and Coal Mining Concession, where we really have to check whether the sources of the Coal Product or Coal Mining Stock or Coal Mining Permit are genuine and backed-up by real legal documentation. for which we as Business Lawyer can conduct the necessary checking on the Legal Documents and licenses, as well as the rulings and policies. 

    Since Foreign Investors are involved, if the requirements under the New Mining law requires that a Limited Liability is required to be the legal entity to conduct the Mining Coal Business than a Joint Venture agreement might be drafted where we as Business Lawyer have to draft such Joint Venture Agreements. Initially before a Joint Venture is negotiated, in the initial stage  we may be requested to draft a Memorandum of Understanding  (MOU) or Letter of Intent to jot down the desires and intention of our Client and the Local Partner.

    One interesting experience tasks which I was involved in assisting legal services related to Coal Business activities, is that our law firm was involved representing a Coal Trader who are also injections some funds to a certain  Mining Company for constructing its Coal Plant Facilities  where the repayment of the loans/funds is through the delivery of the Coal products by the Seller /Debtor to the Buyer or Financier.       

    Well those are among others the functions of the Business Lawyer in assisting Clients to conduct business in Indonesia


       

    Monday, February 08, 2010

    Sudden Inspection by The Minister of Envorimental to Coal Mining Location

    On Saturday according to Kompas newspaper of 8th February,2010, the Minister of Environmental had conducted a sudden inspection to several Coal Mining Location in South Kalimantan. Indication of violation against Law No.32 Year 2009 concerning the Protection and Management of Environmental consisting of non-reclamation on the ex Mining and non re-planting of such ex Mining area.  The Environmental Audit and correction and environmental restoration must be performed by such Mining Company says the Minister as quoted by Kompas newspaper. 


    The Environmental Officers says that it does no longer talk about permit or administration but about pollution and damaging environmental. The Environmental Ministerial will sent letter to enforcement of the law to the control at the Regional and Central Government.  



    The Investigation team have earlier verify the coal mining management environmental in South Kalimantan, 9 Coal Mining Companies at Kabupaten Kotabaru and 7 at Kabupaten Banjar. The Mining Area had been abandoned without reclamation, erosion control, drainage to the pool sediment, and the water at the mining area is below the quality standard which caused the pollution to the river according to Kompas Newspaper of 8th February 2010.

    Note :

    From the above news by Kompas, it shows that attention by the Mining Companies are needed to not ignore the reclamation obligation as required by the New Mineral and Coal Mining laws as well as the Laws concerning Protection and Management of Environmental to avoid being imposed of violating the Laws which might fall under Criminal as well as Civil Legal Exposures. 


    The Minister of Environmental had indicated that the Government Regulation as implementation of the New Mineral and Coal Law shall be issued by the Government.

    Construction Termination Issues

    • Constructions legal issues are really very interesting for Business Lawyers who are interested in the operations.We had an exiting experience relating to this Construction issues where there was a litigation case which occurred, due to the mishandling by the operations people who had one sided terminated a construction contract, without properly observing the manner in terminating a contract as ruled under the termination clauses under the Contruction Agreement .
    • This case erupted into a case where the Owner of the project was being sued 4 times in the Court; The Plaintiff succeeded in seizing the Bank Account of the Project Owner, where there were a significant amount of money in such Bank Account. The suit case involved claims for losses of material, moral, loss of business opportunities, reputation claimed being suffered by the Contractor.
    • The Contractor claimed, that they were not in default, since they were not given the proper manner and time to remedy the work which according to the Owner of the Project was not being properly performed by the Contractor. The lessons that we can take from such case is that, when, you want to terminate a Construction Agreement, due to a default by the Contractor, we have to make sure that the proper reminder had been submitted in writing by the Owner of the project in accordance with the rulings, and time frame, under the terms and conditions of the Construction Contract.
    • The Contractor has to be given the chance to remedy its wrong performance, pursuant to the terms and conditions under the Construction Contract. Even though there was a default due to non-performance by the Contractor, there is a mechanism under the Construction Contracts as to how,  we  can  legally terminate such Contract, to avoid more further losses of time and monies which could be suffered by the Project Owner.
    • Accordingly, we cannot just terminate such Contract without following the terms and conditions and the procedures which are ruled under such Construction Contract. The Contracts are the ruling provisions which had been mutually agreed by both the Contractor and the Owner of the Project, including agreeing as to how shall they handle the situation where the Contractor has conducted a default in performing its tasks under such Construction Agreement.
    Agung Supomo Suleiman  


    Wednesday, February 03, 2010

    The Need of Sinchronizing the Rulings and Laws To overcome Delay in Realization of Investment in Mining Sectors

    According to Kompas Newspaper of 27 January 2010,  the  Indonesian Mining Association predicts that the realization of the Mining may be delayed at this current moment reaching USD 10 Billion. This is because the Investment Climate in Indonesia is not Conducive, particularly due to the Uncertainty of the Law.   The Head of the Indonesian Mining Association ( IMA) Arief S.Siregar had highlighted the above in front of the Hearing of the House People Representative Komisi VII ( Commission VII) in Jakarta on Tuesday 26/1 2010.



    According to the Head of the Komisi VII ( Commission VII) Teuku Riefky Harsya the Government has to speed up the synchronization of the rulings which are issued. Several of the Laws that had to be synchronize are the Oil and Gas Law, Mineral and Coal New Law No. 4 Year 2009, The Environmental Law, the Forestry Law, The Spacial Law, and the Tax Law. This is needed to boost the Mining Investment in order to increase the energy endurance, state revenue and multiply effect to the Economy. The Mining Industry Sectors gives significant benefit through the management of the environment, the development of the area, the development of infrastructure and the absorb of the manpower. Te Mining Sector is dependent upon big capital with the return of capital relatively more longer than other Business Sectors. 


    There are several Mining Investors who desires to bring their capital to Indonesia, however, since there is Un-Certainty in the Law in Indonesia, they had delayed their intention. In fact there is USD 10 Billion amount of capital that is planed to be realized in the Year 2009, but until this present moment is being delayed says Arif as quoted by Kompas Newspaper of 27th January 2010 page 18. Some of the Mining Investment Plan which had been delayed among others include Zinc Mining (seng) and Black Tin Diari Primas USD 500 Million and Nickel Rio Tinto USD 4 Billion. Nickel Weda Bay-Eramet in the  amount of USD 2Billion, Htdromet PT Aneka Tambang USD 1 Billion Dollar. Gold Mine Mearest Soputan USD500 million, FeNi4 Antam USD 320 million. and Coal Mining BHP Biliton.

    The Regulation system in fact should brought in New Investment of USD 25 Billion in the period of 25 Years from now. But at this current moment there exist Overlapping land /area and Laws and Rulings says Arief as quoted by Kompas newspaper. Article 169 b of Law No.4 /2009 concerning Mineral and Coal regulated that the Holder of the Contract must adjust the Law at the latest 1 Year. But Article 169 a stipulates that the Contract is honored until the end of the Contract Period. This really creates confuseness. 

    Under Law No. 32 Year 2009 concerning Environmental, the Department of Environmental has the absolute power to grant permit on top of other permits. We really hope for a clear implementation ruling which can gives Law Certainty. 

    Brief Note : 

    As we observe from the above circumstances,  we noticed that overlapping  rulings as well as desires and goals between the Forestry, Environmental and Mining activities, Departments,  and its Laws  and Rulings are frequently occurring  in Indonesia which caused the delay in the Realization of Mining Investments in Indonesia.   

    This problem is added with the Autonomy Rulings where The Local Government frequently has its own agenda to increase its Regional Income and Budget  for developing its Region. I remember when  working for 5 Years(1993-1998) as in - House Legal Counsel in PT Freeport Indonesia Company  a  Copper Mining  Company,  the Mining Investor wanted the Bupati  to be given more power  to make decision upon the   contribution for  the  Community  Development which was imposed  upon  PT Freeport as a  Copper Mining Company pursuant to its COW,  to enable the Local Government to have  more grip upon its  Local Regional Budget for developing its Region.        

    Based on the above circumstances, I believe that the New Mineral and Coal Mining Law No. 4 Year 2009, had accommodated the Concern of the Regional Government where the Mining Operation is Located.  We can see that   Article 129  of this New Mineral and Coal Law No. 4 Year stipulates that the Holder Of IUP operation production for mineral metal and coal is obligated to pay the amount of 4% to the Government and 6% to the Regional Government from its net profit  as of  such Mining Company is  producing.  The Regional Government Part as meant in sub article 1 is regulated as follows: The Provincial Government gets 1 %, The Regency Government/Producer Municipality get 2.5% and the Regency Government /other cities in the same province get 2.5%.

    From the recent news we saw in the Kompas during these  recent days, it appears that the Regional Government  in Kalimantan are very aggressive in trying to boost its  Regional Revenue, which frequently is in collusion with the Rulings of the Ministry of Forestry where at a Certain Location such as in Kalimantan,  even though the land is rich with Coal Resources, but if  the Coal Resources is located in the Forestry Conversation Area, than  close coordination between the Department of Forestry in the Regional and Central Level and the Governor and the Directorate of Mineral  and Coal has to be conducted so that the Mining Companies are protected from uncertainty progress of overlapping policies and rulings.           
         
         

                   

    Tuesday, February 02, 2010

    IUP ( Mining Business License)

    ( IUP /Mining Business Permit )
    Chapter VII Part I 
    Law No 4 Year 2009

    Article 36
    (1) IUP consists of 2 Stages :
    a. IUP Exploration which  covers General Survey, Exploration and Feasibility Studies
    b. IUP Production Operation which covers Construction activity, Mining, processing and purifying,  transportation and sales.
    (2) IUP Exploration and the holder of IUP Operation Production can perform part or the entire of the activities as meant under paragraph (1)




    Article 37

    IUP is granted  by :

    a) Bupati/Walikota if the WIUP ( Mining Business Permit Area)  is located  in 1(one)  Kabupaten/City Area 
    b) Governor if WIUP is located in the Kabupaten ( Regency) /City Cross Area in 1 (one) province after obtaining recommendation from the Head of Regency/City of such place in accordance with the rules and law.
    c. Minister if the WIUP is located in the province cross area after obtaining recommendation from the Governor/Bupati/Walikota(Mayor) of such place in accordance with the rules and law 

    Article 38 
    This IUP is granted to :
    a. Legal Entity
    b.Cooperative
    c.Individual

    Note :

    Based on the above, it appears that the Granting of  the  IUP ( Mining Business Permit)  is not related to the measurement area of the Mining Area, but is more emphasized to the Location of such Mining Area or Mining Business Permit Area.

    For instance if a Mining Coal Area is located in 1(one) Kabupaten (Regency) /City(kota) than the Bupati or Major is the Authorized Officer who grants such IUP. The next question shall be whether such request for IUP is based on tender of such Mining Coal Area conducted by the Bupati/Major. In order to answer such question we have to check more further on the rulings under such New Mineral and Coal Law No 4 Year 2009.

    From our research with the Directorate Technical Mineral and Coal, it appears that checking  must be made to the Directorate Pengusahaan within the Directorate Technical Mineral and Coal. It appears that there  is a  reorganization within the Directorate Technical Mineral and Coal, where there will be a Directorate of Mineral and Director Of Coal where at this present moment the Directorate of Coal according to the staff that I asked appears to be no longer existing.

    We also found out from the information given by said staff  from  he Directorate Technical Mineral and Coal, that the PP or Governmental Regulation as the implementation of the Law No 4 Year 2009 had not yet been issued. Relating to the news in the Kompas which raised uncontrolled Coal Mining Activities in Kalimantan which was granted in the overlaping Forestry Conservation Area,  and the Non-Reclamation of the Holes left by the Coal Mining Area, we were informed by the staff of the Directorate Technical of Mineral  and Coal that the  Directorate Of Coal  were  the first  Government Institution to implement the Autonomy ruling on the issuance of this IUP or  formerly KP. He also indicated that inputs to the Newspaper usually came from the LSM (Non-Governmental Organization).  However, it seems that the Bupati in granting the Mining Authority does not observe and investigate  whether the location of the Coal  Mining KP which is granted to a Coal Mining Contractor is overlapping with the Forestry Conserve Area.

    I  mentioned to the staff of the Directorate Technical of Mineral and Coal, that as a Business Lawyer we have to give clear certain legal data to our Clients who are Coal Mining Companies and intending  to invest their money in the Coal Mining Sectors in Indonesia, who needs legal certainty on the application of this IUP.

    We have to be certain that the IUP (Mining Business License)  is granted by the proper Authority either from the Regional Level or at the Central Level, pursuant to the Mineral and Coal  Laws  No.4 Year 2009  and its implementation rulings to avoid overlapping with the Forestry Conservation Area, which could result loss of  monies  invested   in the Coal Mining Sectors in Indonesia suffered by the Coal Mining Investors as raised in the Kompas Media Newspaper recently dated around 26, 27 January 2010.

    Monday, February 01, 2010

    Coal Mining Activities in Kalimantan

    As we all are aware The Minerals and Coal Mining Law No. 4 Year 2009 was passed by the DPR ( House of Representatives)  on 16 December 2008 and was signed by the President on 12 January 2009. 

    After 30 Years enjoying COW (Contract Of Work), and Work Agreement For Coal Mining Enterprises  (CCOWs) Indonesia enters into a new era where new licensing regime is introduced replacing the rulings of  COW  to conduct Mining Business Operations in Indonesia.  There are significant changes and several new provisions being introduced. Up to this moment we are still waiting for the Implementation Rulings of this New Law which usually  are done by rulings made by the Government  through the issuances of PP (Government Regulations) as frequently  being mentioned in such  Minerla and Coal Laws.

    Besides the Government Regulation that may also be several  Decrees issued by the Respective Governmental  Officers such as Presidential Decrees, Ministerial of Mines and Energy Decree, Decree from the Directorate of General Mining as well as  Decree from the Directorate of Coal.  In the Regional Local Level, The Governor or the Bupati  and the DPRD ( Regional House Of People  Representative) in coordination with the Governor shall issue Regional Government Rules. 

    As we watch the news relating  to Coal Mining Activities in Kalimantan  made by Kompas  during these last days,  we  understand that several rulings relating to Coal Mining Permits had been made  by the Department of Forestry, as well as the Bupati,  where The Department of Forestry  had issued the permit to lend and use the part of land of located within the the Forestry Protection or Forestry Conversation Area. It is indicated that the Bupati and the Walikota had issued several Kuasa Pertambangan Batubara ( CoaL Mining Authrotity Permit), which according to the Governor of East Kalimantan there are around 1.180 Coal Mining Permits issued by the Local Regional Government (Pemerintahan Kabupaten/Kota) and 32 Coal Mining Authority Permits issued by the Central Government. 

    On the other hand,  Kompas Newspaper dated 27th January, 2010,  said that the Bupati  of Kutai Timur (East Kutai) had revoked 12 KP from 38 KP which was issued by the previous Bupati. The reason in revoking this 12 KP is because 7 KP was issued within the Kutai National Park Conservation which is in violation of the rules. The other  5 KP is revoked since no progress of following up the permit from General Survey to Exploration is performed. Several other KP are being evaluated with the reasoning that no reclamation was made, no seriousness in continuing the Coal mining is conducted and overlaping with other activities. 

    Since Otonom Region was introduced in 2001 up to the New Law No. 4 Year 2009, Kompas, says  that  there are thousands of Mining Aurthority being issued by the Regional Government, many of which are not in accordance with the allotment of the land. One of the Sources said that the Reclamation of the ex Coal Mining Area Holes should actually not be treated as Burden, but rather as Investment by the Coal Mining Investors.

    Brief Awareness of the NEW Mineral  and COAL LAW No. 4 Year 2009. 

    Before we continue in observing the Kompas newspaper Highlights of this indicated  Un - Controlled Coal Mining Activities in Kalimantan,  it is wise,  to educate our selves with  Brief Key Issues on the New Mineral and Coal Law No 4 Year 2009 to enlighten ourselves upon the New Minerals and Coal Law  in Indonesia.

    This New Mining Law  does not differentiate between mining licenses for domestic and foreign investors. All investors must have either : 

    a Mining Business Permit (Izin Usaha Pertambangan-“IUP”), a People’s Mining Permit (Izin Pertambangan Rakyat-“IPR”) or  

    a Special Mining Business Permit (Izin Usaha Pertambangan Khusus-“IUPK”)  to engage in mining activities. 

    INDONESIA: Take-over leads to $1,200,000,000 coal mining contracts, PT THIESS CONTRACTORS INDONESIA [Indonesia/Australia] - Order #: 119103.: An article ... & Plant Operations in the Developing World

    • An IPR will only be given to :
      • an individual (for a maximum of 1 Ha)
      • a group of people (for a maximum of 5 Ha) and 
      • a cooperative (for a maximum of 10 Ha). 
    • An IUP and IUPK is granted to Private Companies with certain size limitation.  
    • The IUP/IUPK is divided into an Exploration and a Production Operations IUP or IUPK. 
    • The Exploration IUP/IUPK covers General Surveys, Exploration and Feasibility Studies, and the Production Operations 
    • IUP/IUPK covers construction, mining, processing and refining activities as well as transportation and sales. 
    • Each type of IUP/IUPK has its own term and area limitation. 
    •  
    • Significant Key Features of the Law No 4 Year 2009 : 

    Duration : 


      Exploration IUP:   

      Metal: up to 8 years for a concession area between 5,000 Ha and 100,000 Ha; 
      Non-metal: up to 3 years for a concession area between 500 Ha and 25,000 Ha; 
      Specific non-metal: up to 7 years; 
      Rocks: up to 3 years for a concession area between 5 Ha and 5,000 Ha; and 
      Coal: up to 7 years for a concession area of between 5,000 Ha and 50,000 Ha. 

      Production Operations IUP
      Metal: up to 20 years for a concession area of up to 25,000 Ha, extendable for 10 years a maximum of twice; Non-metal: up to 10 years for a concession area of up to 5,000 Ha, extendible for 5 years a maximum of twice; Specific non-metal: up to 20 years extendible for 10 years a maximum of twice; 
      Rocks: up to 5 years for a concession area of up to 1,000 Ha, extendible for 5 years a maximum of twice; and Coal: up to 20 years for a concession area of up to 15,000 Ha, extendable for 10 years a maximum of twice. 

      An IUPK is granted for a National Mining Reserve Area. 

      Durations and concession areas of IUPK


      Exploration IUPK: 

      Metal: up to 8 years for a concession area of up to 100,000 Ha; and 
      Coal: up to 7 years for a concession area of up to 50,000 Ha.

      Production Operations IUPK: 
      Metal: up to 20 years for a concession area of up to 25,000 Ha, extendible for 10 years a maximum of twice; and Coal: up to 20 years for a concession area of up to 15,000 Ha, extendable for 10 years a maximum of twice.




       The relevant Regional Government issues a WIUP (Wilayah Izin Usaha Pertambangan/Mining License Business Area) to a business entity, a cooperative or an individual.  

      A Metal minerals or Coal WIUP can be issued through public tender, while a Non-metal minerals and Rocks WIUP can be issued through an application for a reserve area. 

      State Reserve Areas (Wilayah Pencadangan Negara-“WPN”) are to be determined by Central Government with prior approval from the DPR ( House of Representatives). These areas may be exploited under an IUPK which may be issued to an Indonesian Legal Entity including a State Owned Enterprise, Regional Owned Enterprise or private sector entity. 

      State/Regional Owned Enterprises are given priority in obtaining IUPK and if not taken,  the Private Sector can obtain it through public tender. 

      TRANSFER OF IUP/IUPK - Ownership -shares of Company Holding IUP / IUPK

      An IUP/IUPK cannot be transferred. However ownership or shares in a Company holding an IUP/IUPK can be made. 

      Transfer of ownership or shares in the Indonesian Stock Exchange may only be permited if :
      • the company has found 2(two) prospective areas during the Exploration Period, and  
      • there must be a  prior notification to the Minister, Governor, or Regent/mayor in accordance with their authorities and such transfer is not contrary with the applicable laws and regulations. 
      The Central Government, after consultation with the House of Representatives, can determine policy on giving priority to minerals and coal for domestic interests, including the authority to determine production levels for each commodity in each year on a Province-by-Province basis. This provision may have an impact on the annual production limit of a company holding a license to export to the international market.  

      As we are  aware inthe Oil and Gas Sectors in Indonesia, Domestic Market Obligation Private (DMO) is also regulated where 25% of its annual production has to be sold for  Domestic Needs. In the Coal Sectors, it appears that Coal commodities are also needed by the Local Power Plant,  by which  DMO on Coal shall also be implemented.    

      Government  Regulations will be made for implementing this DMO ruling.


      Holders of IUP and IUPK must increase the value of their minerals and/or Coal resources through Mining, processing and refining, and the use of the minerals and coal. Accordingly, they must process and refine the minerals and coal domestically. This provision are also found in the existing COW for General Mining of Cooper, thus  this  is a continuation of the policy of the Government which are also found and implemented by other Countries. 

      A license holder can cooperate with other holders of Production Operations IUPs for the same minerals and coal processing and refining. 


      The companies can either build their own processing/smelting facilities or use existing processing/smelting facilities in Indonesia owned by other parties. Relating to the Cooper Product of PT Freeport Indonesia, PT Smelter in Surabaya was the realization and implementation of this smelting facilities requirement. 


      Existing Contracts of Work (CoWs) which are already in the production phase, have a 5 year grace period to comply with this obligation. 

      Sharing Net  Profits ot of Coal production : 

      Holders of Production Operations IUPKs for metal minerals and coal must pay a production fee of 10 % of their net profits as of production, with 4 % going to the Central Government and 6 % being shared between the relevant province and regencies.


      A temporary suspension can be granted to a holder of an IUP/IUPK, in case of force majeure, or conditions which hamper mining activities, cause some or all mining activities to cease or the environment can no longer support the mineral and/or coal production activities. This temporary suspension will not reduce the duration/ term of the IUP. 


      The duration of a Temporary Suspension may be up to 1(one)  year and is extendable once for 1 (one) year. 

      Divestment  : 

      After 5 years of production, all companies must divest any shares owned by foreign parties to the Central/Regional Government, a State/Region owned enterprises or local companies. This provision will be regulated more  further through a Government Regulation.
      Usage of Local / National Mining Services.

      Holders of IUPs or IUPKs must use local and/or national mining services companies. If no local companies are found available, foreign companies whom are deemed as Indonesian legal entities may be used. Holders of IUPs and IUPKs may not use subsidiaries or affiliates to provide mining services, unless Minister of Energy and Mineral Resources approval is being obtained. 

      Corporate Crime .

      The New Mining Law No. 4 Year 2009 adopts  the concept of corporate crime. Sanctions can  be imposed on Contractors as legal entities. If crime is committed by a legal entity, the legal entity and/or its management will be charged with the crime. If found guilty, they are ordered to pay the regulated fine plus an additional 1/3. Besides the criminal sanctions, the business license and legal entity status  of such Company can be revoked.
      Any dispute arising from the implementation of an IUP, IPR or IUPK is to be settled through the courts and arbitration domestically under the prevailing laws

      Transition Period.

      Existing CoWs and CCoWs remain valid until the expiration of their terms. However, the contract terms and conditions must be adjusted to the provisions of the New Mining Law within 1 (one) year of the enactment of the New Mining Law 12 January 2010 except concerning state revenue.


      It appears that this New Mining Law does not rule any transitional provision for KPs (Mining Authorizations) issued to Indonesian companies regarding whether KPs already issued will remain valid and whether they must be adjusted to the New Mining Law, as is the case of the existing CoWs and CCoWs as described above. It appears that this may be  further regulated in the implementing regulations.


      The implementing regulations (Government Regulations, Ministerial Decrees and directives) for the implementation of the provisions of the New Mining Law, are to be made  within 1 year after the enactment of this New Law No. 4 Year 2010. 




      Saturday, January 30, 2010

      Headlines Observation on Coal Mining Activities Founded in Kompas Jan 26, 2010

      It appears that Kompas Newspaper had made serious observations on the Coal Mining Activities in Kalimantan these last days from 25, 26, 28 30 January 2010. As a Business Lawyer who is advising Clients concerning Coal Mining activities in Indonesia, I really am interested in reading  such observation especially from the legal aspects. We are aware that there is the New Law No. 4 Year 2009 on Mineral and Coal Mining which was legalized on 12th January 2009. 

      According to Kompas Newspaper dated 26th January, 2010,  The Minister of Forestry, Zulfikli said that 169 holders of the Mining Permit are naughty. They had mined in the Forestry Conservation Area. Each Provincial must owned Forestry Area with the area of 30%. If the Forestry Area is damaged according to Zulfikli quoted in the Kompas Newspaper,  they will face law.

      Relating to the indication that the envirornmental damage is geered   by the Overlapping Permits issued by the Forestry Department and the Local Government, the Head of the Forestry Centre Information Masyhud MM  according to Kompas explained 3 matters:  
      • Firstly, The Minister of Forestry pursuant to the rules had never issued the pinjam pakai (Lending use) of the Forestry Area to the Conservation Forestry Area. 
      • Secondly, the lending use permit forestry area for the mining activities is granted to the extent  it is complying with the applicable rules. Therefore, not every Mining Authority which is issued by the Bupati shall obtain ithe zin pinjam pakai ( lend use permit).  
      • Thirdly, the Mining Activities which is outside the forestry area is not the authority of the Minister of Forestry.      

      Controlling Team 

      According to Kompas the Controlling Team from the Environmental Department  is sent to South Kalimantan to solve the damaged terain/land resulted from the Coal Mining activities.  Eventhough major part of the Mining Authority Permit is granted by the Local Government, the Central Government can impose sanctions according to such Kompas news. Besides the Control Team sent by the Central Government, the Regional Control Team shall also be sent to clarify the damage of the enviromental resulted by the Mining is East Kalimantan.

      Kompas quoted that Hermien as the Deputy Minister of Environmental   said that based on the Law No 32 Year 2009 concerning the Protection and Environmental Management (Perlindungan dan Pengelolaan Lingkungan) Article 77, the Minister of Environmental can impose  administrative sanction to the serious violators against the environmental protection and management.

      The Coal Mining operation in South Kalimantan and East Kalimantan had left giant holes. These Giant Holes according to Kompas Newspaper dated 26 January 2010, is not only left by the Mining who owns the Mining Authrity Permit, but also by the holder of the  PKP2B  (Work Agreement For Coal Mining Enterprises).

      According to Kompas, the data which are collected from Badan Lingkungan Hidup Daerah ( BLHD) (Regional Environmental Body of South Kalimantan) shows that the Mining Reclamation  Activities in South Kalimantan until October 2009 reached 3.132 Hectare from 20.000 Hectare opening Mine. The Reclamation is done by 16 Mining Companies holder of the  PKP2B  ( Work Agreement For Coal Mining Enterprises).  This means that there still exists 16.868 Hectares which Reclamation is not yet done. 





      Kompas said as shown in page 15 of its Newspaper dated 26th January,  that acccording to the Head of  Badan Lingkungan Hidup Daerah ( BLHD) there are 2 Mining Holders of PKP2B  ( Work Agreement For Coal Mining Enterprises) who cannot afford to do the Reclamation, where Kompas mentioned PT Adaro Indonesia and PT Arutmin Indonesia.  The Head of  Badan Lingkungan Hidup Daerah ( BLHD) will restrain granting the AMDAL (Analisa Mengenai Dampak Lingkungan - Analysis concerning the Environmental Impact ) for increasing its coal  production of such company, if  there are no serious efforts to close such Mining Holes.  Kompas said that the Public Relation from PT Arutmin Indonesia had not yet received the explanation from its management relating to the non-performance of the Reclamation of the 17 Mining Holes. However, Kompas said that Arutmin as the Partner of the Government shall take notice of the guidance from Badan Lingkungan Hidup Daerah ( BLHD) (Regional Environmental Body of South Kalimantan).

      According to Kompas  the Badan Lingkungan Hidup Daerah ( BLHD) (Regional Environmental Body of South Kalimantan) faced difficulties in getting the concrete data on the how much hoiles are left, since the Kabuoaten Government which issued such permit does not report to the Provincial Level. The manpower for controlling is limited upon the mining in such area.

      There is also an indication that ther are Coal Mining Contractor in Kutai Kartanegara,  who does not provide  Reclamation Bond in the Mining Activities to the Local Government. However, the Company is still obligated to perform the reclamation upon the holes  which are finished being digged.


         

      Analysis





      Based on the above Kompas Oberservation, we can see that  there are sevral Siginifacant Issues that emerged :

       A. Overlapping Issues

      a) The Overlaping implementation of granting  the  Lending Use of the Forestry  Area to the Mining Contractors, where there appears to be different of  policy between the Regional Government and the Central Government.
       b) Kalimatan seems to be rich of Coal Deposit and Coal Resources, for which for economic reasons Deleping and Mining such Coal Resources seems to be more attractive than keeping the place as a Forestry Conservation and Protection.
      c) Thus there maybe a dilema situation faced by the Regional Government where they feel that Revenue for developing the Region is also considered important where the Resources of such Revenue are taken from developing and Mining The Coal Resources.

      d) RECLAMATION 

      • Relating to the  Reclamation, it appears that from the business side, Reclamation absorb Costs and expenses, and the Coal Mining Companies seems to avoid adding/ allocating the Costs /Expenses for Reclamation such Huges Mining Holes left after they completed their Coal Mining in such Area.   
      •  We have to observe the Reclamation Rulings under the New Mineral and Coal  Mining Law No. 4  Year 2009 and we must also observed the Other Laws which are ruling such Reclamation issues which are associated to Mining Activities and Environmental Impacts due to the Coal Mining Operations, particularly relating to the Sanctions which may be imposed against the Coal Mining Companies if they fail to conduct such Reclamation Obligation..    

      Wednesday, January 27, 2010

      Observing Kompas news Concerning Coal Mining Activities in Kalimantan

      I read in the Kompas Newspapers, the Indonesian Daily Newspaper 25 January 2010, Kompas had made some observations on the Coal Mining in East Kalimantan which according to Kompas is  annoying,   since the Mining Practice is not conducted properly. Kompas had made such observation in East Kalimantan and West Kalimantan, where according to such news paper the Massive Mining activities are  not -controlled.

      According to Kompas Newspaper, the Taman Hutan Raya Bukit Soeharto (TAHURA - Forestry Park Mount Suharto) at Kaltim (East Kalimantan) and Forestry Protection Mount Meratus at East Kalimantan which is suppossed to be protected is not avoided from Coal Mining Operations.    

      Kompas further said that at TAHURA, the land which are developed is actually part of the Center Research Tropical Forest University Mulawarman, Samarinda having the area of 40 Hectare.  The Developer /Management of PPHT according to Kompas Newspaper,  has no power since the Mining Permit is issued by  The Forestry Minister, with the reason that before the Decision of determining the border of the TAHURA by the Minister Decision No. 577 Year 2009, such location is located outside such Forestry Protection/ Conservation Area.    

      One interesting news, shown in Kompas Newspaper is that 2 Contractors who are  supposed to develop House Glass Laboratorium at Telukdalam, Kecamatan Tenggarong  with the Area of 51,000 hectare, had developed Coal Mining after they realized and noticed  that Coal Deposit in such Area is plenty enough and good, without owning the Mining Authority.  

      Furthermore in such Kompas Newspaper,  it indicates that on the Protection Forest not only there are plenty of owners of Mining Authority but there are plenty of big holes where the Coal had been completely mined. In such Location according to Kompas there exists 299 Mining Authorities, with the understanding that there are 299 Parties who are granted Permits To Mine Coal  at the Hutan Lindung Pegunungan Meratus      (Forestry Protection Meratus Mountain). Furthermore in such Newspaper it says that only few of those mining which request permit pinjam pakai ( borrowing use permit) of such forestry from the Minister of Forestry.

      The other permit are being granted by the Local Bupati since they do not know that such location is within the Forestry Protection Area. According to the records of Kompas, during the last 6 Years (until 2009)  at 4 Provincial Area in Kalimantan there exists 2.047 Mining Authority. East Kalimantan according to Kompas  Newspaper is having the First Rank which issued Mining Authroity, that is 1.180 Mining Authority, followed by  Kalimantan Selatan (400-578), Center Kalimantan (427) and South Kalimantan (40).

      According to Kompas, if one Mining Authority covers the area of 2.000 hectare, the location which had been dedicated for mining reached 4.09 million Hectare, which is more than the Area of  Kalimatan Selatan (3,75) hectare.     

      Kompas says that the Governor of East Kalimantan cannot do much considering that the Minister of Forestry and Head Area Level II ( Bupati/Wali Kota) has the authority to issue the Mining Authority. It indicates that at the present moment in Samarinda around 70% of its Area (71.823 Hactare) is dedicated for Mining Area.

      Kompas got the information from the Head of the RT, Kelurahan Sempaja Selatan , that the location of the living area is around 25 meter from the mining hole, resulting their  houses are frequently flooded. 


      Farmers at Desa Separi (Village Separi) and Bangunrejo, Kecamatan Tenggarong  appears also to be affected since they failed to harvest their products due to the coal mining waste water  which entered into their rice field. This causes the farmer to sell their rice filed to the Mining Authority. The Sale price is high says several farmers according to Kompas Newspaper.

      Several Rice Fields are sold by the Farmers to the Mining Authority holders and  converted to become Mining Area.

      There are also many village roads which are curved - cut out  and developed to become Mining Area.  
      Examples of such happening is at Kecamatan Siani, Kabupaten Tapin, where the inhabitants can no longer walk since part o the road had been changed into mining area. According to Kompas several of the inhabitants must be cautious upon the Project Vehicles,  where the inhabitants has to ask for permit to go across such location.

      According to Kompas the changes of the Forestry had destroyed 7 - 12 ton of Carbon organic every Year. This Carbon is need by microorganisme for the continuation of the ecosystem. One of the sources being interviewed by Kompas said that the Coal Mining does not contribute much for improving the growth of such region. From the production value of Coal production Kalsel which reached 22 trilliun ( for production of 80-100 ton per year), the genuine revenue of the Region ( Pendapat Asli Daerah) does not reach Rp 1 trilliun.

      According to Kompas despite the above, The Business of Coal Mining still said that what they had conducted provides positive effects. Mining absorb manpower and moved the inhabitant economy such as the emerging of warung (small shops) and living places. according to Maskur Achmad project Manager of PT Satria Bahana Sarana, a Coal Ming Contractor at Kecamatan Sangasanga, Kabupaten Kutai Kartanegara as quoted by Kompas Newspaper.              

               Analysis.

      • Based on the above Kompas observation.,  we have to observe whether this Coal Mining Activities are in accordance with the proper standard operational mining procedures, to avoid disturbances felt by the people surrounding the area of such Coal Mining. 
      • It also indicates that there are several overlapping mappings of activities between the Forestry Protection Area and such Coal Mining activities. 
      •  Coordination between the Mining Directorate and the Minister of Forestry, the Bupati  and Governor have  to be intensified seriously. 
      •  Socialization with the Local People are significant to be made by the Local Authority in coordination with several Departments concerned such as the Department of Directorate of Coal Mining,  Department of Forestry  and its subdivisions officers including Newspapers including the Coal Mining Rights and Authority pursuant to the Mineral and Coal Law No. 4 Year 2009

        Saturday, January 16, 2010

        Managing Your Cash Problems

        When we are running our own Boutique Law Firm there are times that you have to seek  ways how to solve your cash flows. It is like other business, where you have to evaluate and start marketing yourself and shop around to your customers and show them that you are there to render the legal services which maybe required by your prospective client. Today I went to several of  my customers. After having been 11 1/2 years independent running my firm, now called Suleiman Agung & Co I realize that we have to manage your health and stamina in order for us to keep on  being independent as a Business Lawyer. Every institution or person regardless of the size of their firm, may  face some cash flow problem once a while  in their life time.

        The significant element is that every person who are in this earth has a unique life experience where he or she has to struggle to keep on living. There is a motto : You are what you are. You are not changed by the outside infrastructure condition of your business, since the inner power is planted inside you by ALLAH The ALL MIGHTY and not outside you. Of course if you are lucky enough your outside infrastructure may be great. By becoming more old you tend to believe that every person has its own unique life journey, where he or she must  detect the best way to response every test or problem they are facing.

        Yes, we really have to be honest and not run away from the problems that you are facing.  You have to have faith in life.You must be patient, tough and not easily surrendering yourself to  the down side  condition which you may face in your life. By writing in this Blog I am actually self talking to myself as a method to seek the answer which has to be  explored and founded by me in solving this cash problems.But talking to oneself is not enough. You must do the correct and  proper action to solve a certain unpleasant situation. 

        There may be people who are lucky to succeed in their financial condition. During  the 11 1/2  years  being self employed,  there are some fruitful financial years but there are also some hard time in terms of cash in. Since you are conducting services done by  person, this really depends on the physical and stamina condition of your body. There is no free lunch in this world, nobody will help you but you yourself  has to rise back and take your grip and identify the action that has to be taken.

        You must have gained lots of experiences during such time.Frankly speaking sometimes you feel really tired,  since there is no automatic continuous Clients who  always  use  your legal services. In reality there is no automatic on the air situation where Clients will always need your legal services. There is always a risk that you have to take and there are always the subsequent consequences you must face in the real life.  

        You have to be really tough and patient. In terms of experiences of providing legal services I really have  a lot of experiences in rendering legal services  to various Business Clients. If you are running your own business legal firm, you have to remember that there are many competitors  who are also rendering  legal services that you are providing. So the competition is really tough, and networking might be a significant element.

        One of the business strategy that I am doing as a Business Lawyer is writing legal aspects and your  real life experiences so that you can detect the phase of your life journey to cope with the problems, ups and downs of running you independent life as a Business Lawyer.

        Legal Fee pricing of your legal services may also play a significant role, where frequently, Clients may request for a cheap and lesser price, which may be really hard for you to handle and manage your cash  flow.   It appears that Clients really do not care how your overhead expenses are. What they want is receiving legal services with cheap and lesser legal fee.These are my  cash flow experiences in running a boutique law firm in Indonesia now called Suleiman Agung & Co

        I am not talking about theoretical cash flow here,  but really factual 11 1/2 Years experiences in running a self employ legal firm. Since I started from scratch and bottom rock, my only problem in running and continuing this self employ Legal practices is how to reduce my operational  expenses to enable balancing the cash in and cash out of my Legal Firm.

        In terms  of rendering professional legal services, since I have 30 Years experiencing  working as legal professional Lawyer, I really feel confident in handling and providing the effective and efficient legal services. However in terms of cash flow I really have to combine the need of proper legal fee to cope with my needs  in maintaining healthy cash flows so that I can survive in feeding my family and the continuation of my self employ Legal Firm.                      

                  

        Saturday, January 09, 2010

        Legal Justice Versus Legal Certainty

        The above issue appears to merge in Indonesia at this present moment. The people in Indonesia has the perception that the Legal Enforcement only applies to the powerless people. Whereas for the Big Powerful person or institution,  since they can hire Lawyers they feel that the are immune and untouchable by the law.



        These perceptions was demonstrated by the Prita Case where a patient who makes complaint upon the hospital service through internet had been sued by the Hospital claiming that their good name was being damaged by Prita's writing in the Internet media.

        There were 2 cases being filed, by the Lawyers representing the Hospital, one through the Criminal Court and the other through a civil claim. Initially the First Instance Court issued its Decision  against Prita where she was demanded to pay around Rp204 million to the Hospital. However, the public's Voices  through the support of the TV Media in Indonesia  had  made a protest against such verdict  by  collecting  coins to support Prita, where they succeeded in collecting  and raising around Rp600million. This is really fantastic amount which shows that the Indonesian People are voicing their rights for Legal Justice Treatment by the Court in Indonesia. In the progress the Criminal Court in the First Instance had rejected the Hospital claim.


        This Coin Protest was actually a symbol of protest from the people against Injustice Court Treatment  that is felt  being imposed against the powerless  victims. Indonesia is a democracy society where we can freely make  protests against Injustice Legal Treatment felt by  the people being made by the Legal Institution in this Country of Indonesia.

        Hospitals in Indonesia nowadays appears to be more of Commercial  rather than Social Institution, who must serve the sick people who needs medical care. Lawyers defending Hospital  against complain made by the patient must also be sensitive in handling cases like above. If there are complaints by the Patients,  the Hospital must actually appreciate such inputs for better services to its Patients. Eventually, in the progress after facing the public reaction,  the Hospital realize of their negative reaction,  for which  they  decided to revoke  their claim against Prita in the Court.

        The above is really a good lesson for us  as Business Lawyers that we have to be sensitive upon issues relating to maintaining good services to its patients.     

        Friday, January 08, 2010

        Now Indonesia's Judicial Mafia Fight Gets Serious: SBY

        ----- Original Message -----
        From: Loeky Harahap
        To: fhui-70an
        Sent: Wednesday, January 06, 2010 7:06 AM
        Subject: [FHUI-70AN] Now Indonesia's Judicial Mafia Fight Gets Serious: SBY



        President Susilo Bambang Yudhoyono on Tuesday stressed his resolve to purge the “judicial mafia,” calling on law-enforcement agencies to commit to the fight. To boost those efforts, he said he would demand bureaucratic reforms across 13 ministries and state institutions linked to law enforcement and governance.

        “Remember, in the hands of corrupt law enforcers, anything bent can be straightened and the straight can be bent. I want judicial mafia practices to cease,” said Yudhoyono at the State Palace, while introducing the 2010 budgets for ministries, government institutions and regional administrations. Law-enforcement officials, whether in Jakarta or the regions, should not manipulate the law, he said.

        The president named eliminating corruption in the judiciary as one of his top priorities when announcing the government’s first-100-day program in October. Last week, he formed a six-member task force to suggest ideas for eliminating graft in the country’s courts, considered to be some of Asia’s most corrupt. The task force met with leaders of the National Police and the Corruption Eradication Commission (KPK) on Tuesday to discuss the way forward. A high-profile feud between the two institutions brought judicial corruption into the political spotlight last year.


        Task force chairman Kuntoro Mangkusubroto said the antigraft agency had vowed to help. “The KPK pledged to assist us through its facilities, such as its complaint-handling mechanism that enables people to report judicial mafia activities online and anonymously,” he said. Edward Aritonang, a spokesman for the National Police, said it was also forming a team to support the task force. “We leave everything fully in the control of the task force,” he said. The team would brief provincial police chiefs in Jakarta today, he added.

        Yudhoyono also warned critics against judging his government’s success in fulfilling the pledges of its first-100-day program. On Monday, Coordinating Minister for the Economy Hatta Rajasa claimed, without offering evidence, that the government had completed 92 percent of its 100-day goals. “Although the government’s first-100-day program is important, it is impossible to contain all the development priorities and targets for five years. In addition, it is illogical to measure government success for the 2009-14 period by the first 100-day program,” Yudhoyono said.

        But Ikrar Nusa Bakti, a political analyst at the Indonesian Institute of Sciences (LIPI), called the first 100 days “crucial,” saying success would boost public trust. “I’d say the success of the program is the embryo of the success of the government’s five-year program,” he said. Yunarto Widjaja, a political analyst at Charta Politika, suggested that ministers should not hesitate to admit failures. “They should convince the people that they will work harder to implement their programs,” he said. 

        Yudhoyono said the economic achievements of last year made him optimistic his government could reach its 2014 economic goals: an annual growth rate of 7 percent, inflation of 5 percent, poverty at 8 percent to 10 percent, and unemployment of 6 percent. The economy grew by more than 4 percent in 2009. Inflation was 2.78 percent, the lowest in a decade.

        Additional reporting by Antara


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        Monday, December 21, 2009

        Lawyer is like Artist

        A Lawyer according to me at a certain level is like an artist. They tend to be freedom. Freedom to express their ideas and visions.  If the rules are  regarded as rigid, uncertain, unclear,   Lawyers must seek and  found a breakthrough or way out from such uncertain rules to solve the problem.

        If  you are a Business Corporate Lawyers you tend to seek a solution to  make the business goal and achievement  met and be fulfilled. Well, my 30 Years of Experiencing as a Business Lawyer educates me that nothing in this world is perfect. Especially in Indonesia the product of Rules is actually a Political Product created by the House of Peoples Representatives which consists of members of the winning Political Parties and the Executives from the President together with its Ministers including the Departments headed by the Ministers.

        Since all Departments have their interests in their respective fields, these Departments frequently  tend  to  only look from their own perspectives without viewing  other Departments view. These are  the reason why there  are lots of situation where  Overlapping and contradictory rules  occurs between one Department and the other Department  such as the Department of Forestry and the Department of Mining and Energy. You must also remember that besides the written rules there may also be Policies made by the Ministers of a certain Department which sometimes may need further clarification for the business players. We may also frequently found contradictory rules between the Central Governments and the Regional Local Governments in  this  Non-Centralize Era in Indonesia.  I believe that the Government and the Parliament knows about such problems which are usually expressed by the Business Associations representing the business players concern.

        Well as a Business Lawyer you have to found out a way how to overcome such overlapping rules for the interest of creating certainty for your Clients business goals and objectives.

        Sunday, December 13, 2009

        Experiencing Negotiating Joint Operation Agreement

        As a Business Lawyer it will be really  interesting and exiting,  if you have the experience accompanying your Client in negotiating a Joint Operation Agreement (JOA) which are entered by the Participant Interests Holders of a Technical Assistance Agreement (TAC) in Indonesia. 

        The position as a Business  Lawyer may be different from one case to another. If for instance, you are a Business Lawyer, who are representing your Client, who needs some additional investors to support its cash flows to perform the oil and gas operations as agreed upon under the TAC with BP Migas,  and decides to transfer or assign a major portion of its undivided interest under the TAC to a certain potential Investors, you may be in a position to be more of a listening and wait for the proposal of a draft JOA from such prospective Oil/Gas Investors.You may also submit a proposal of  the first draft to be further reviewed by such potential prospective oil/gas investors. Some significant elements which are usually touched in a JOA, when you just entered into a  negotiation are among others  concerning the issues describing or clarifying the purpose  the Parties entered into this JOA.

        As we are aware in the Oil and Gas Business several Investors are involved into this venture since significant amount of Monies are involved where the Parties shall share the costs and expenses in such Oil and Gas Business Operations in proportion to the percentage of their Participant Interest Share. The operations usually involved activities such as  exploration, appraisal, exploitation, development, storage, production and disposition of Hydrocarbons from the Contract Area. There are operations that are being Jointly Operated in the sense that the costs shall be shared, this will be the Joint Operations.

        However there are also circumstances where Only  a number or some of  the Participant Interest Holder  who  participates  in the operations,  which shall be usually called Sole Risk Operations.Thus in order to create a clear understanding between the Parties who intends to participate in the TAC , the Parties requires a separate agreement among themselves which is covered by this JOA. Accordingly  this JOA  is required to  regulate   the  rights and obligations of the Parties ( which does not include BP Migas)  concerning  the operations to be conducted under the TAC between the Signing Parties mentioned under the TAC as the Participant Interest Holder, who had signed the TAC with BP Migas. These  includes among others  the joint exploration, appraisal, exploitation, development, storage, production and disposition of Hydrocarbons from the Contract Area,  the decommissioning of  the joint property and conditions for carrying out Exclusive Operation in the Contract Area. 


        This JOA shall usually be agreed by the Parties  as  the entire agreement between the Parties regulating  the terms and conditions between them related to the Joint Operations, unless there  exists other documents which are agreed by the Parties  to also also govern their agreements. The scope under the JOA may include the terms under the TAC between The Parties with BP Migas, but may also contain activities which are under the TAC but is not intended to be addressed in this JOA.

        These for instance may consists of construction, operation, ownership, maintenance, repair and removal of facilities downstream from the delivery point, transportation of the Parties’ Entitlements downstream from the delivery point, marketing and sales of the Hydrocarbons and other issues which are  not intended to be addressed in such JOA.The Parties shall further specify the composition of the Participating Interests of the Parties. The composition of the Parties will play an important role in describing the portion of rights, obligations and liabilities.

        The major portion holder of the Participant Interest under the TAC, shall usually be elected as the Operator of such TAC. If a Party transfers all or part of its Participating Interest pursuant to the provisions of this JOA and the TAC, the Participating Interests of the Parties shall be revised accordingly. The Parties will also regulate the terms which covers the rights, obligations and liabilities of the Parties, including any and all of the rights and interests in and under the TAC. 

        The Parties will decide  which part of the expenses incurred by the Operator are being considered and be charged to the Joint Account and which are not. There will also be an Operating Committee (or Op Com) to be established by the Parties which will consist of each party’s representatives. The OpCom will  be the organ where the Parties or the Operator shall communicate upon the work program and oil and gas activities such as the Exploration program and Budget of Operating Costs which will be conducted in a certain running Calendar Year.

        Thus,  before a work program is being submitted to BP Migas,  such work program will be first discussed and agreed upon through this Operating Committee mechanism. Frequently there will be instances, where Sole Risks Operations may be allowed to be conducted, if one of the party under the JOA decided to conduct exploration activities, which the other Party at such moment does not wish to participate.

        If the results of such Sole Risks Operations happens to be a commercial field, the Non-Participating Party may participate, provided however, that on top of the Real Expenses and Costs which  had to be met pursuant to its portion of Participant Interest, such Non-Participating party has to pay and compensate a certain percentage payment.

        Please note that the above items  are  not intended to be a legal advise nor legal opinion  in any form or manner by the Writer and thus shall not be used as a legal advise or legal opinion, but is merely intended to share information and experiences.    


        Cheers 
        Agung Supomo Suleiman






        Mobile Phone : 0816830647





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