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Resource Nationalism in the Law and Policies of Indonesia: A Contest of State, Foreign Investors, and Indigenous Peoples

  • M.Y. Aiyub KADIR (a1) and Alexander MURRAY (a2)
Abstract

This paper examines resource nationalism in the legal system of Indonesia under the interpretation of Articles 33(2), 33(3), and 18B(2) of the 1945 Constitution. It will describe the evolution of the meaning of resource nationalism since independence to the present day, in the context of foreign investment, to investigate the extent to which resource nationalism has benefited indigenous peoples. This paper argues that resource nationalism in the legal system of Indonesia has been driven by state-centric goals and has strayed far away from considerations of the benefits to the indigenous people (Masyarakat Hukum Adat/MHA), so as to dominantly benefit the elites of government and foreign investors. This paper will introduce a new conceptual framework in order to develop an effective argument about resource nationalism using International Human Rights Law.

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*

Lecturer in Law, Syiah Kuala University, Indonesia.

**

Senior Lecturer in Law, Anglia Ruskin University, United Kingdom.

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1. The three subprovisions of art. 33 have remained essentially untouched throughout four packages of post-Suharto constitutional amendments, but two additional paragraphs have been added: (1) “[t]he organisation of the national economy shall be conducted on the basis of economic democracy upholding the principles of togetherness, efficiency with justice, continuity, environmental perspective, self-sufficiency, and keeping a balance in the progress and unity of the national economy;” and (2) “[f]urther provisions relating to the implementation of this Article shall be regulated by law”.

2. BARKER, Joshua, “Beyond Bandung: Developmental Nationalism and (Multi)cultural Nationalism in Indonesia” (2008) 29 Third World Quarterly 524; ABDULGANI, H. Roeslan, The Bandung Connection: Konperensi Asia-Afrika di Bandung tahun 1955 (Bali: Gunung Agung, 1980) at vi.

3. BUTCHER, John G., “Becoming an Archipelagic State: The Juanda Declaration of 1957 and the ‘Struggle’ to Gain International Recognition of the Archipelagic Principle” in CRIBB, Robert and FORD, Michele, eds., Indonesia Beyond the Water's Edge (Singapore: Institute of Southeast Asian Studies, 2009), at 44.

4. BURKE, Roland, Decolonization and the Evolution of International Human Rights (Philadelphia. PA: University of Pennsylvania Press, 2010) at 46.

5. See “Final Communiqué of the Asian-African Conference of Bandung” in Asia-Africa Speak from Bandung (Djakarta: Ministry of Foreign Affairs of Republic Indonesia, 1955) at 161–9.

6. See “Bandung Spirit” (December 2015), online: Bandung Spirit <http://www.bandungspirit.org/>.

7. Supra note 5.

8. See Declaration on the Granting of Independence to Colonial Countries and Peoples, GA Res. 1514 (XV), UN Doc. A/RES/15/1514 (14 December 1960), art. 1.

9. See ROMULO, Carlos P., The Meaning of Bandung (Chapel Hill, NC: University of North Carolina Press, 1956) at 3.

10. See CHATTERJEE, Partha, “Nationalism Today” (2012) 24 Rethinking Marxism: A Journal of Economics, Culture & Society 9.

11. Abdulgani, supra note 2 at 69; Sukarno, , “Speech at the Opening of the Bandung Conference (18 April 1955)” in Asia-Africa Speak from Bandung (Djakarta: Ministry of Foreign Affairs of Republic Indonesia, 1955) at 19–29; APPADORAI, Angadipuram, The Bandung Conference (India: Indian Council of World Affairs, 1955).

12. See Burke, supra note 4 at 45.

13. Sukarno, supra note 11.

14. See Burke, supra note 4 at 45.

15. “Asia-Africa Conference Proceeding”, Bandung Conference Secretariat, 1955.

16. Several diplomats from TW states have recognized that the language of self-determination was borrowed from the final resolution of the Bandung Conference. See Burke, supra note 4 at 51–2; and for further discussion, see KADIR, M.Y. Aiyub, “Application of the Law of Self-Determination in a Postcolonial Context: A Guideline” (2016) 9 Journal of East Asia and International Law 7.

17. Supra note 5.

18. Supra note 5.

19. See Burke, supra note 4 at 39.

20. Supra note 5.

21. Chatterjee, supra note 10.

22. CHIMNI, B.S., “The Past, Present and Future of International Law: A Critical Third World Approach” (2007) 8 Melbourne Journal of International Law 499.

23. Dino Patti DJALAL, “Geopolitical Concepts and Maritime Territorial Behaviour in Indonesian Foreign Policy”, unpublished Master's thesis, Simon Fraser University, 1990 at iii.

24. Such as Britain, Australia, the Netherlands, France, and New Zealand. See the full argument in United Nations, “United Nations Conference on the Law of the Sea, Official Records, First Committee on Territorial Sea and Contiguous Zone” (1958), online: United Nations (UN) <http://untreaty.un.org/cod/diplomaticconferences/lawofthesea-1958/vol/english/1st_Cttee_vol_III_e.pdf>; Sora Lokita confirms that “it is highly likely that Indonesia's baselines were adopted as a key example in the drafting process of the LOSC provisions of the archipelagic baselines”. See Sora LOKITA, “The Role of the Archipelagic Baselines in Maritime Boundary Delimitation”, United Nations (2010), online: UN <http://www.un.org/depts/los/nippon/unnff_programme_home/fellows_pages/fellows_papers/turnquest_0506_bahamas.pdf>.

25. See ANAND, R.P., Studies in International Law and History: An Asian Perspective (Leiden: Martinus Nijhoff Publishers, 2004) at 180–96.

26. The coastal states that oppose the US include Angola, Argentina, Brazil, China, Colombia, Costa Rica, Colombia, Ecuador, El Savador, Peru, the Philippines, and Vietnam. See OXMAN, Bernard H., “The Third UNCLOS: The Eight Session, 1979” (1980) 74 American Journal of International Law 10.

27. See LARSON, David L., “Security Issues and the Law of the Sea: A General Framework” (1985) 15 Ocean Development and International Law Journal 99 at 136.

28. See Anand, supra note 25 at 224.

29. Ibid.

30. The Nationalisation Law 86/1958 (art. 7) stated that this law came into force on 27 December 1958, and has retroactive power starting from 3 December 1957.

31. For example, Law Number 86/1958 on the Nationalisation of all Dutch Companies, Law Number 3Prp. /1960 on Possessing the Unmovable Property Belong to Personal Dutch Citizenship, government regulation number 2/1959 on the Main Framework of the Implementation of Nationalisation of Dutch Company, government regulation number 3/1959 on the Establishment of the Body of Dutch Company Nationalisation, government regulation number 19/1959 on the Confirmation of Farm/Plantation of Dutch Company which are under Nationalisation Scheme, government regulation number 235/1961 and number 1/1960 on Confirming Dutch Pharmacy Company under Nationalisation Scheme, government regulation number 1/1961 on Confirming Trade Dutch Company under Nationalisation Scheme, government regulation number 48/1960 on Confirmation of Insurance Dutch Company under Nationalisation Scheme, government regulation number 34/1960 on the Nationalisation of Dutch Maritime's Company in Indonesia, and so forth.

32. This law was intended, as stated in point (c), to bring “maximum benefit for Indonesia's people and to strengthen peace and security of state”.

33. The compensation was construed with the ability of the new state as compared to what was formulated under the “Hull Standard”, i.e. prompt, adequate, and effective, as the former colonies have seized the wealth of the state. See the argument of Indonesia's representative, Mochtar Kusumaatmadja, in the case of Tobacco Bremen (1959) in LEYSER, J., “Indonesia's Nationalisation of Dutch Enterprises and International Law” (1960) 14 Australian Outlook 200.

34. Ibid.

35. See LINDBLAD, J. Thomas, “The Economic Decolonization of Indonesia: A Bird's-eye View” (2011) 4 Journal of Indonesian Social Sciences and Humanities 1 at 18–20.

36. For more history on mining in Indonesia, see KUSUMAATMADJA, Mochtar, Mining Law (Bandung: Padjadjaran University, 1974) at 2.

37. See KARIM, Mirza A. and MILLS, Karen, “Indonesian Legal Framework in the Oil, Gas Energy and Mining Sectors; Including Dispute ResolutionArbitral Women (2003), online: Arbitral Women <http://www.karimsyah.com/imagescontent/article/20050923090930.pdf>; and SALENG, A., Hukum Pertambangan [Mining Law] (Yogyakarta: UII Press, 2002).

38. See a broad analysis on this issue in Bernadetta DEVI and Dody PRAYOGO, “Mining and Development in Indonesia: An Overview of the Regulatory Framework and Policies”, Centre for Social Responsibility in Mining, Sustainable Mineral Institute, University of Queensland, Final Report, March 2013 at 16.

39. Karim and Mills, supra note 37.

40. The first mining site was founded in Ombilin, Sawahlunto, West Sumatra in 1866 and commenced operation in 1891. See Devi, supra note 38 at 15.

41. See arts. 11 and 12 of Law Number 44 Prp. 1960 on Oil and Gas Law; Mark NEWBERY, “New Indonesian Oil and Gas Law” (2002) 20 Journal of Energy & Natural Resources Law 355–6.

42. See arts. 2 and 3 of Law Number 44 Prp. 1960 on Oil and Gas Law.

43. See in full in the Indonesia Foreign Capital Investment Law Number 1 of 1967 (entered into force 10 January 1967).

44. The Cabinet of Ampera was formed on 28 July 1966 by Sukarno, but in actuality, Suharto was in charge of this cabinet after the military coup on 30 September 1965; and on 11 March 1966 Suharto was formally appointed as Acting President by MPRS (the Provisional People's Consultative Assembly) under the claim of the Letter of Supersemar (Order of March the Eleventh) from Sukarno. This cabinet was then dissolved on 11 October 1967. See ELGA, A. Yusrianto, Misteri Supersemar, Dimanakah Supersemar Berada? (Jakarta: Palapa, 2013).

45. See the Decree of the Sukarno's Dwikora Cabinet Presidium, No. AA/D/25/1965 of 19 March 1965.

46. See the Decree of the Sukarno's Dwikora Cabinet Presidium No. AA/D/26/1965.

47. See the Decree of Dwikora Cabinet Presidium, No. AA/D/27/1965 on the placing of the Pan Am Oil Company under the temporary supervision of the government. Additionally, see the Decree of the Chairman of the Cabinet Presidium (Soeharto) No 129/U/KEP/12/1966 on 30 December 1966.

48. See the Indonesia-US Investment Guarantee Agreement in Jakarta on 7 January 1967. The agreement was signed by Adam Malik, the Minister of Foreign Affairs, Republic of Indonesia, and Jack W. Lydman, Chargé-d'Affaires a.i. for the United States of America.

49. Ibid.

50. On 12 March 1967, Sukarno transferred his power to Suharto. On 7 April 1967, the Contract between The Government of Indonesia and Freeport was signed.

51. See WEBSTER, David, “‘Already Sovereign as a People’: A Foundational Moment in West Papuan Nationalism” (Winter 2001–02) 74 Pacific Affairs 507 at 522.

52. See the history of ExxonMobil in Indonesia, “Our History in Indonesia”, ExxonMobil, online: ExxonMobil <https://www.exxonmobil.co.id/en-id/company/about-us/history-in-indonesia/our-history-in-indonesia>.

53. PT Arun was established by Suharto on 19 September 1978 with two special harbours for trading purposes. The equity was possessed in the following proportions: Pertamina fifty-five percent, ExxonMobil thirty percent, and Japan Indonesia LNG Company (JILCO) fifteen percent.

54. See “Kisah Mesin Penangguk Uang Bernama Arun [The History of Money Machine of Arun]” Tempo (12 May 2003), online: Tempo <http://bisnis.tempo.co/read/16890/kisah-mesin-penangguk-uang-bernama-arun>.

55. See further explanations in ROSS, M.S., “The Role of Land Clearing in Indonesia's Transmigration Program” (1980) 16 Bulletin of Indonesian Economic Studies 75; and ELMHIRST, Rebecca, “Space, Identity Politics and Resource Control in Indonesia's Transmigration Programme” (1999) 18 Political Geography 813.

56. There has been a huge investment of LNG exploration by ExxonMobil in North Aceh and gold mining by Freeport in the South Province of Papua, which have strong links to the emergence of conflict in these areas.

57. It signifies that the essential agreement of Indonesia's people in the early decades of independence is still valid and beneficial if implemented in current circumstances. Also, it provided the basis for state control over essential natural resources and services for the maximum benefit of the people.

58. The constitution covers the thirty-seven Articles and four transitional clauses in the 1945 Indonesian Constitution. It has undergone a series of four amendments since the fall of the Suharto regime in 1998. The amendment of the constitution occurred in 1999, 2000, 2001, and 2002. See SOEMANTRI, H. Sri, Hak Uji Material di Indonesia [The Right of Material Review in Indonesia] (Indonesia: Penerbit Alumni, 1997) at 6–11.

59. The term “jihad” is primarily used to mean struggle for self-defence in Islamic doctrine, which was effectively used as an anti-colonial tool during Dutch colonialism. The notion then transformed into anti-privatization and anti-foreign investment as it was considered to be part of the continuing colonialism over natural resources in Indonesia. The constitutional jihad movement was initiated from the 2009 National Conference to investigate laws which contradicted the constitution, particularly in the field of natural resources. This formulation was then brought and formally imposed as Muhammadiyah's organizational agenda in the 2010 National Congress during the organization's 100th anniversary. See further exploration in HABIR, Ahmad D., “Resource Nationalism and Constitutional Jihad” (2013) Southeast Asian Affairs 121; and PIESSE, Mervyn, “Indonesia: Muhammadiyah's ‘Constitutional Jihad’ Threatens to Undo Key LegislationFuture Directions (10 June 2015), online: Future Directions <http://www.futuredirections.org.au/publication/indonesia-muhammadiyah-constitutional-jihad-threatens-to-undo-key-legislation/>.

60. “Muhammadiyah Tiga Tahun Dalami Kelemahan BP Migas [Three Years Examining the Weaknesses of BP Migas]” (16 November 2012) Tribunnews, online: Tribunnews <http://www.tribunnews.com/nasional/2012/11/15/muhammadiyah-tiga-tahun-dalami-kelemahan-bp-migas>.

61. KARIM, Mirza, “A Controversial Decision of the Constitutional Court on the Indonesian Oil and Gas Law” (2013) 6 Journal of World Energy Law & Business 260 at 261.

62. See MK Decision Number 002/PUU-I/2003, 20/PUU-V/2007, and 036/PUU-X/2012 on Judicial Review of Law Number 22/2001 on Petroleum and Natural Gas Towards the 1945 Constitution. MK Decision Number 02/PUU-I/2003 ruled that the division of upstream and downstream in the oil and gas business still falls within the meaning of arts. 33(2) and (3) of the Constitution. As seen in MK Decision Number 20/PUU-V/2007, during the second round, MK also rejected the need for parliament to agree with regard to the Cooperation Contract of Oil and Gas.

63. See MK Decision Number 36/PUU-X/2012 (MK Decision 36).

64. Ibid., the decision of the court to disband BP Migas had immediate legal effect and was final. In such a critical situation, the president of Indonesia issued Presidential Regulation Number 95/2012, which provisionally transferred the powers and responsibilities of BP Migas to the Indonesian Ministry of Energy and Mineral Resources, and declared that all production sharing contracts that had been entered into with BP Migas should remain valid until they expired. Subsequently, the Minister of Energy and Mineral Resources followed up with the establishment of the Interim Working Unit for Upstream Oil and Gas Activities (SKSP MIGAS), which reported directly to the Minister of Energy and Mineral Resources, to take over the duties and function of BP Migas.

65. Ibid.

66. MK Decision 36, supra note 63 at 101.

67. Ibid., at 107.

68. Ibid., at 108–9; and see the Conclusion of the Decision at 115–23.

69. The issuance of Law Number 22/2001 on Petroleum and Natural Gas was to rectify the insufficiency of Law Number 44/1960 and Law Number 8/1971 on Pertamina.

70. Pertamina was established in 1971 to act as an operator to drill and produce oil, select contractors, and enter into production sharing contracts with foreign investors. See Habir, supra note 59 at 121–34.

71. See Government Regulation Number 44/2002; Karim, supra note 61 at 260.

72. See CLARK, Michael S. and RENI, Dewi Savitri, “BP Migas DecisionSSEK (2012), online: SSEK <https://www.ssek.com/blog/bp-migas-decision>.

73. BUTT, Simon and SIREGAR, Fritz Edward, “Analisis Kritik Terhadap Putusan Mahkamah Konstitusi Nomor 36/PUU-X/2012 (A Critique of MK Decision 36)” (2013) 25 Mimbar Hukum 1.

74. MK Decision 36, supra note 63 at 106.

75. However, a prominent lawyer, Hikmahanto Juwana, has a different opinion, opining that BP Migas does not represent the states but is instead a private legal entity. Hence, the contract is considered a private contract under international private law, not international public law. Therefore, if BP Migas loses in the claims by the contractors, this will not directly affect the states. According to Juwana, there is no need to amend Law Number 22/2001 on Petroleum and Natural Gas; instead, only the Contract of Work [KKS] has to be amended to keep it consistent with the Constitution. See JUWANA, Hikmahanto, “The Obligation to Ensure the Conformity of International Treaties with the Constitution” (2011) Indonesian Journal of International Law 434 at 446.

76. BP Migas is suspicious of “inefficiency and misuse of power”. See MK Decision 36, supra note 63 at 105 and point 3.13.4.

77. For some explanation on this issue, see Karim, supra note 61 at 260–3.

78. See SUMARNO, Ari H., “Migas Setelah Pembubaran [Oil and Gas after Dissolution]Kompas (25 January 2013).

79. BUTT, Simon and LINDSEY, Timothy, “Economic Reform when the Constitution Matters: Indonesia's Constitutional Court and Article 33 of the Constitution” (2008) 44 Bulletin of Indonesian Economic Studies 239 at 255.

80. For example, art. 7 of Law Number 20/2002 on Electricity, stated “appropriate cost”, whereas the previous Law Number 15/1985 on Electricity stated “affordable cost” for the community. Hence, appropriate cost is dependent on the investors as providers, not on the affordability to the people. See MK Decision 001/PUU-2003.

81. MK Decision Number 001-021-022/PUU-I/2003.

82. Ibid., at 347.

83. See the argument of MK Decision Number 001-021-022/PUU-I/2003 at 348, 340–52.

84. See MK Decision 001/PUU-2003.

85. There are several registration numbers for this Law in MK, i.e. PUU Number 58/PUU-11/2004; Number 59/PUU-II/2004; Number 60/PUU-11/2004; Number 63/PUU-11/2004; and Number 08/PUU-11/2005.

86. See MK Decision Number 058-059-060-063/PUU-II/2004 and Number 008/PUU-III/2005 at point 5, 474; point 9, 475–523.

87. Ibid., at point 6, 474.

88. MK Decision Number 85/PUU-XI/2013 at 107.

89. See art. 7(1) 2004 of Law of Water Resources.

90. An example can be seen in Klaten. See “Walhi Tuding Undang-Undang Sumber Daya Alam Pesanan IMF”, Republika (12 March 2015), online: Republika <http://www.republika.co.id/berita/nasional/umum/15/03/11/nl1ux7-walhi-tuding-undangundang-sumber-daya-alam-pesanan-imf>.

91. For example, Multinational Company in Curug Goong, Banten Province. See “Returning State Control over Water Resources” (2015) 97 Konstitusi 3 at 8–13.

92. See Consideration Points 20 and 36 of MK Decision Number 85/PUU-XI/2013.

93. MK Decision Number 058-059-060-063/PUU-II/2004, and Number 008/PUU-III/2005 at point 9, 470, 486–523.

94. See Consideration Point 30, Ibid.

95. See a complete decision in MK Decision Number 85/PUU-XI/2013. The MK has reviewed the Law on Water Resources and issued a conditional constitutionality decision; however, it has been considered inapplicable as there may still be space for foreign capital to invest in water resources. See MK Decision, supra note 93, and Number 008/PUU-III/2005.

96. Coastal waters are marine waters adjacent to land covering as far as twelve nautical miles from the coastline, the waters linking the shore and islands, estuary, bay, shallow waters, brackish marshes, and lagoons. See art. 1(7) of the Law on the Management of Coastal Areas and Small Islands [MCASI].

97. See MK Decision Number 3/PUU-VIII/2010.

98. Also, see MK Decision Number 3/PUU-VIII/2010, which held that the MK has accepted the claim over Law Number 27/2007 on CMSI; see DAMANIK, M. Riza, “An Analysis of the Constitutional Court Ruling on the Annulment of the Provisions on Coastal Water Concessions (HP-3)” (2013) 12 Indonesia Law Review 164.

99. Art. 47 of Law Number 18/2004.

100. MK Decision Number 55/PUU-VIII/2010, 100–108.

101. See MK Decision Number 32/PUU-VIII/2010. In this decision, MK refers to the previous decision in Decision Number 001-021-022/PUU-I/2003, dated 15 December 2004, that state control should be construed broadly, rather than in the private law system.

102. See Amar Putusan of the MK Decision Number 32/PUU-VIII/2010 on Judicial Review of Mining Law Number 4/2009, 143.

103. See art. 18B(2) of the 1945 Constitution.

104. See MK Decision Number 34/PUU-IX/2011.

105. See MK Decision Number 35/PUU-X/2012 at 4–5.

106. Ibid.

107. See MK Decision, supra note 105 at point 1.1.

108. Ibid., at point 1.2.

109. See Consideration Point 30 of the MK Decision Number 85/PUU-XI/2013 and Hukum Online, “Membaca Tiga Regulasi Pasca Pembubaran BP Migas” (27 November 2012), online: Hukum <https://www.hukumonline.com/berita/baca/lt50b471f6c40e5/membaca-tiga-regulasi-pasca-pembubaran-bp-migas>.

110. It stated that “Adat Forest is Not Part of State's Forest”. See MK Decision No 35/PUU-X/2012, 179.

111. Ministry Forestry Circulation No.1/Menhut II/2013.

112. See a complete analysis in Yance ARIZONA, “The Application of MK Decision No 35/PUU-X/2012 in the Regional Legal Reform”. The paper was delivered at a workshop aimed at strengthening the management of Adat forests and conservation areas of Masyarakat Adat, Working Group ICCAs Indonesia [WGII] and FoMMA, Malinau. The workshop took place during the period of 24–26 September 2013.

113. It stated: “With the support of the World Bank (WB) and Asian Development Bank (ADB), the government will (i) establish the legal and regulatory framework to create a competitive electricity market; (ii) restructure the organisation of PLN [the national electricity provider]; (iii) adjust electricity tariffs; and (iv) rationalise power purchases from private sector power projects. The government has commenced renegotiations with independent power producers, will initiate the organisational restructuring of PLN by June 1999; and will enact a new Electricity Law by December 1999.” See Government of Indonesia, “Letter of Intent to the IMF” (16 March 1999), online: International Monetary Fund [IMF] <http://www.imf.org/external/np/loi/1999/031699.htm>. See also points 5 and 7 of the MK Decision Number 85/PUU-XI/2013, 15–16.

114. See some thoughts of the Justice in the MK in SUASTAMA, Ida Bagus Radendra, “The Principle of MK's Decisions on Oil and Gas and Electricity Law” (2012) 24 Mimbar Hukum 187.

115. Indonesian law regulates the responsibility of foreign companies in various regulations, i.e. Law Number 40/2007 on Limited Liability Companies, Law Number 23/1997 on Environmental Management, Law Number 20/2001 on Eradication of the Crime of Corruption, Law Number 19/2003 on State-Owned Enterprises, Law Number 13/2003 on Manpower, and Law Number 25/2007 on Capital Investment. These laws are then followed by various implementing regulations such as government regulations, ministerial regulations, and regional autonomous regulations.

116. The law is mainly based on a regulating licence system in Indonesian mining. See for instance Izin Usaha Pertambangan (Mining Business Licence) in arts. 1(7), 6(e) to (g), and so forth.

117. “Weighing the Costs of Indonesia's Export Ban: The Straw that Breaks the Camel's Back?” (2014) Engineering and Mining Journal 103.

118. Supra note 115.

119. The domestic partners are classified as the central, provincial, and district governments, as well as state enterprises and domestic private companies. See GR 24/2012 on the Obligation of Divestment of Foreign Mining Companies.

120. According to art. 97 point 1 GR Number 24/2012 regarding the implementation of Mining and Mineral Law 2009, it is stated that during the five-year period after production, foreign investors have to gradually undergo divestment until the national stakeholders have fifty-one percent bond ownership. See also art. 112 of Law Number 4/2009 on Mineral and Coal Mining.

121. Government Regulation Number 22/2010 on Mining Areas regulates planning for mining areas, including the determination of traditional mining areas and the procedure for data and information collection for mining areas. The Ministry of Energy and Mineral Resources [MEMR] Ministerial Regulation 5/2011 on the Corporate Performance Rating Program in Environmental Management provides an assessment of corporation environmental management. The MEMR Ministerial Regulation 12/2011 sets out the Procedures for Determination of Mining Regions and Information System for Mineral and Coal Mining Regions.

122. See MEMR Ministerial Regulation 7/2012.

123. The minerals includes copper, iron, lead, zinc, and magnetite.

124. See arts. 102 and 103 of Law Number 4/2009 on Mineral and Coal Mining.

125. The Freeport company has about 22,000 employees, while Newmont has about 8,000 employees.

126. Art. 170 of the law obligated the investor to undergo in-country processing by 12 January 2014. This is also confirmed by art. 112 of Government Regulation Number 23/2010 on the Implementation of Mineral and Coal Mining Business Activities. However, the government relaxed regulations such that certain mineral concentrates could be exported until 12 January 2017. See art. 10, point 4, Law of Investment 2007 that a foreign company has an obligation to conduct a training and technology transfer session for Indonesian workers.

127. See for example the preamble of the Bilateral Investment Treaty [BIT] between the Government of Indonesia and the Netherlands 1994, the Government of Indonesia and Australia 1993, and so forth.

128. See the BIT between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Indonesia (UK-Indonesia BIT) for the Promotion and Protection of Investments, 27 April 1976, entered into force on 24 March 1977. Also the 1968 Germany-Indonesia BIT, para. 3 stated: “… to increase the prosperity of both nations.”

129. See VANDEVELDE, Kenneth J., “A Brief History of International Investment Agreements” (2005) 12 University of California Davis Journal of International Law and Policy 157.

130. See HIGGINS, Rosalyn, Conflict of Interests: International Law in a Divided World (London: Bodley Head, 1965) at 65–8.

131. In this regard, Juwana admits that: “Any revocation by the Constitutional Court or Supreme Court of an instrument of ratification or a legislation that resulted from the transformation of an international treaty would generate complexities in an international dimension.” See Juwana, supra note 75.

132. For further elaboration, see Juwana, supra note 75 at 439–40.

133. Former Indonesian Vice President Boediono confirmed Indonesia's decision at a summit in The Hague on 23 March 2014, saying that “Indonesia will create a new bilateral investment agreement that will be adjusted to recent developments”, although Indonesia has not yet presented details on any proposed new investment treaty framework. See Simon NESBITT, “Indonesia Terminates its Bilateral Investment Treaty (BIT) with the Netherlands from 1 July 2015 and May Terminate All of its BITs” Lexology (26 March 2014), online: Lexology <http://www.lexology.com/library/detail.aspx?g=2a596886-3ad2-464b-a510-ab3b0cff503b>.

134. See for example BIT between Indonesia and United States 1967, BIT between Indonesia and the Netherlands 1994, BIT between the United Kingdom and Indonesia 1976, BIT between Switzerland and Indonesia 1974, BIT between Germany and Indonesia 1968, BIT between Denmark and Indonesia 1968, and so forth.

135. Art. 15(2) of the BIT between Indonesia and the Netherlands 1994 stated: “In respect of investment made prior to the date of termination of the present Agreement, the foregoing Articles shall continue to be effective for a further period of fifteen years from the date of termination of the present Agreement.”

136. See art. 9(4) of the BIT between Indonesia and the Netherlands 1994.

137. Michael Ewing-Chow and Junianto James Losari argue that “This suggestion of a reactive approach does not capture the reflective concerns of Indonesia”. Michael EWING-CHOW and Junianto James LOSARI, “Indonesia Letting its Bilateral Treaties Lapse so as to Renegotiate Better Ones” Financial Times (15 April 2014), online: Financial Times <https://www.ft.com/content/20c6c518-c16c-11e3-97b2-00144feabdc0>.

138. The terminating BIT as reported in the Financial Times, 26 March 2014: “Indonesia to Terminate more than 60 Bilateral Investment Treaties.” Such a report attracted reactions from several academics as the idea is considered vague in terms of what essentially Indonesia is going to do with the existing BITs. One cannot imagine the consequences if it were possible for Indonesia to unilaterally terminate the treaty without consideration of the other party, which might contribute to the uncertainty of the legal status of current foreign investments. See Ewing-Chow and Losari, supra note 137.

139. Art. V(2) of the New York Convention states: “Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: (a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or (b) The recognition or enforcement of the award would be contrary to the public policy of that country.”

140. Art. 66 of Law Number 30/1999 provides that an International Arbitration Award shall only be recognized and enforced in Indonesia under the following circumstances: (a) The International Arbitration Award must have been rendered by an arbitrator or arbitration tribunal in a country which, together with the Republic of Indonesia, is a party to a bilateral or multilateral treaty on the recognition and enforcement of International Arbitration Awards; (b) International Arbitration Awards, as contemplated in item (a), above, are limited to awards which, under the provisions of Indonesian law, fall within the scope of commercial law; (c) International Arbitration Awards, as contemplated in items (a), above, may only be enforced in Indonesia if they do not violate public order; (d) An International Arbitration Award may be enforced in Indonesia only after obtaining an order of Exequatur from the Chief Judge of the District Court of Central Jakarta; and (e) An International Arbitration Award, as contemplated in item (a), in which the Republic of Indonesia is one of the parties to the dispute, may only be enforced after obtaining an order of Exequatur from the Supreme Court of the Republic of Indonesia, which order is then delegated to the District Court of Central Jakarta for execution.

141. See further explanation in HIKMAH, Mutiara, “The Roles of the Supreme Court of the Republic of Indonesia in Enforcement of International Arbitral Awards in Indonesia” (2013) 3 Indonesia Law Review 238.

142. See Karaha Bodas Company L.L.C. v. Pertamina and PT Perusahaan Listrik Negara (PLN), Decision of District Court of Central Jakarta Number 86/PDT.G/2002/PN.JKT.PST; JUWANA, Hikmahanto, “The Annulment of International Arbitration Decision in National Court” (2002) 21 Jurnal Hukum Bisnis 68.

143. It is a case which arose in relation to the development of the energy sector of geothermal exploration and production of electrical power by Pertamina and PLN which failed due to the economic crisis of 1997–98. This case is rooted in the collapse of the rupiah and the insistence of the IMF for the Indonesian government to issue Keppres 37/1997 jo. Keppres 5/1998 to suspend a number of infrastructure projects, including twenty-seven private power contracts that had been entered into for the fifth consecutive year. See the High Court Decision Number 444PK/Pdt/2007 Year 2007 on Pertamina v. Karaha Bodas Company L.L.C.

144. See Yani Hariyanto v. ED&F Man Sugar, 1205 K/Pdt/1990.

145. The Supreme Court Decision No.02K/Ex'r/Arb.Int/Pdt/2000 on Banker Trust International plc v. PT. Mayora Indah Tbk.

146. See the High Court Jakarta Decision Number 637/Pdt/1994.

147. See Bakri Brothers v. Trading Corporation of Pakistan Ltd, 4231 K/pdt/1986.

148. According to Erman Rajagukguk, “Courts of civil law countries have a broad interpretation of public policy, whereas their common law counterparts interpret it in a narrower way”. See RAJAGUKGUK, Erman, “Implementation of the 1958 New York Convention in Several Asian Countries: The Refusal of Foreign Arbitral Awards Enforcement on the Grounds of Public Policy” (2011) 1 Indonesia Law Review 1.

149. See Law Number 5/1968.

150. See arts. 54 (1), 54(2), 55 of the ICSID Convention.

151. See Amco Asia Corporation and others v. Republic of Indonesia (ICSID Case No. ARB/81/1).

152. Ibid. See also TAHYAR, Benjamin H., “Confidentiality in ICSID Arbitration After AMCO Asia Corp. v. Indonesia: Watchword or White Elephant?” (1986) 10 Fordham International Law Journal 103, and the Supreme Court Decision Number 102PK/PDTSUS/2009.

153. See Cemex Asia Holdings Ltd v. Republic of Indonesia (ICSID Case No. ARB/04/3).

154. See Rafat Ali Rizvi v. Republic of Indonesia (ICSID Case No. ARB/11/13).

155. See Churchill Mining PLC and Planet Mining Pty Ltd v. Republic of Indonesia (ICSID Case No. ARB/12/14 and 12/40).

156. Ibid.

157. See the views from foreign investors in CHU, Kathy and SENTANA, I Made, “Clouds Gather Over Indonesia—Investors Fear that Contract Disputes, Nationalism will Curb Access to Natural ResourcesAsian Wall Street Journal (2012); “Resource Nationalism Frustrates Exxon” Oil Daily (2007) at 1.

158. See Nusa Tenggara Partnership B.V. and PT Newmont Nusa Tenggara v. Republic of Indonesia (ICSID Case No. ARB/14/15).

159. See CHOI, Susan, “Judicial Enforcement of Arbitration Awards under the ICSID and New York Conventions” (Fall 1995–Winter 1996) 28 New York University Journal of International Law and Politics 175 at 205; PEERENBOOM, Randall, “The Evolving Regulatory Framework for Enforcement of Arbitral Awards in the People's Republic of China” (2000) 1 Asia-Pacific Law & Policy Journal 1 at 65.

160. Rajagukguk, supra note 148.

161. MIRANDA, Lillian Aponte, “Indigenous Peoples as International Lawmakers” (2014) 32 University of Pennsylvania Journal of International Law 203 at 217.

162. MANAN, Bagir, Pertumbuhan dan Perkembangan Konstitusi suatu Negara [Growth and Development of the Constitution of a State] (Bandung: Mandar Maju, 1995) at 6.

163. According to data from the World Bank, from 2010 to 2014, 94.2 percent of Indonesia's population had access to electricity. See World Bank, “Access to electricity” online: World Bank <http://data.worldbank.org/indicator/EG.ELC.ACCS.ZS>; see also “President: 19 million household family has no access to electricity” Tribunews (15 March 2015), online: Tribunnews <http://www.tribunnews.com/nasional/2018/10/24/menteri-esdm-sebut-52-juta-masyarakat-indonesia-belum-menikmati-listrik>.

164. HATTA, Mohammad, Beberapa Fasal Ekonomi: Djilid Pertama: Djalan Keekonomi dan Kooperasi (Indonesia: Perpustkaaan Perguruan Kementrian P dan K, 1954) at 265.

165. Ibid., and MARBUN, S.F. and MD, Mahfud, Pokok-Pokok Hukum Administrasi Negara, (Yogyakarta: Liberty, 1997) at 41–6.

166. The amendment of the constitution would need to follow the Fourth Amendment of the 1945 Constitution in 2002. Art. 37(1) states that the amendment can be conducted based on the proposal from at least one-third of all the members of the MPR. Additionally, Art. 37(3) states that “To amend the Articles of this Constitution, the session of the MPR requires at least 2/3 of the total membership of the MPR to be present”. Art. 37(4) states that “Any decision to amend the Articles of this Constitution shall be made with the agreement of at least fifty per cent plus one member of the total membership of the MPR”.

167. This approach has been commonly used in the Islamic legal reasoning known as “Qiyas”. See for example KHALLAF, Abdul Wahhab, Ushul Fiqh (Indonesia: Darul Kutub, 1995).

168. MIRANDA, Lillian Aponte, “The Role of International Law in Intrastate Natural Resource Allocation: Sovereignty, Human Rights, and Peoples-Based Development” (2012) 45 Vanderbilt Journal of Transnational Law 796.

169. This may aid in the interpretation of arts. 3 and 4 on self-determination in the UNDRIP 2007.

170. The special autonomy policy is regulated by Law Number 35/2008 on the Determination of the Regulation in lieu of the Law (Perpu) No. 1 of 2008 on the Amendment of Law Number 21/2001 on the Special Autonomy for Papua Province. Law Number 21/2001 consists of, inter alia, affirmative action requiring the governor and regent/mayors to be of Papuan origin; the establishment of a Papua People's Assembly, a representation of several ethnic, religious, and women's groups in Papua; and a bigger budget allocation in which an average of eighty percent of Papuan income is re-allocated to Papua. Through this special autonomy scheme, since 2003, Papua Province has been divided into two provinces, i.e. Papua and West Papua. See KADIR, M.Ya'kub Aiyub, “Revisiting Self-Determination Conflict Settlements in Indonesia: An International Law Perspective” (2015) 5 Indonesian Law Review 123.

171. See further exploration of the existence of indigenous people in IHR law in Miranda, supra note 161.

172. See WRIGHT, J., “Minority Groups, Autonomy, and Self-Determination” (1999) Oxford Journal of Legal Studies 605.

173. DURUIGBO, Emeka, “Permanent Sovereignty and Peoples’ Ownership of Natural Resources in International Law” (2006) 38 George Washington International Law Review 33 at 37.

174. Individuals are recognized as actors in, for example, international human rights law and the law of armed conflict.

175. See the UN Committee on ESCR, Fifty-second Session Summary Record of the 7th Meeting, held at the Palais Wilson, Geneva, on Thursday, 1 May 2014, at 10 a.m., UN Economic and Social Council, E/C.12/2014/SR.7, 28 May 2014, para. 8 [The Committee on ESCR 2014].

176. For more explanation on the transmigration programme during Suharto's era, see Anna Lou ABATAYO, “Is Deforestation the Legacy of Transmigration?”, University of Hawaii, 28 February 2015.

177. See art. 1(2) of the LAG 2006 and its similar wording in various regulations in association to Aceh. For example, art. 1.2 of the Qanun Number 15/2013 on Mineral Mining and Coal, and so forth.

178. See explanation on the Aceh as indigenous people in the context of Indonesia in BOWEN, John R., “Should We Have a Universal Concept of ‘Indigenous Peoples’ Rights’? Ethnicity and Essentialism in the Twenty-First Century” (2000) 16 Anthropology Today 13.

179. The term “Human Rights Committee” used hereinafter covers the committee responsible for both the ICCPR and ICESCR, unless otherwise stated.

180. Human Rights Committee, “Concluding Observations on the Initial Report of Indonesia” UN International Covenant on Civil and Political Rights”, CCPR/C/IDN/CO/1, 21 (August 2013) 1–9.

181. See the UN Economic and Social Council, Committee on ESCR, “Implementation of the International Covenant on Economic, Social and Cultural Rights”, Initial Reports submitted by State Parties under arts. 16 and 17 of the Covenant, Indonesia, E/C.12/IDN/1, 29 October 2012, para. 9. This is also similar to the Indonesia report in art. 1 for the UN ICCPR, para. 2 [The Committee on ESCR 2012].

182. See ASPINALL, Edward and FEALY, Greg, “Introduction” in ASPINALL, Edward and FEALLY, Greg, eds., Local Power and Politics in Indonesia: Decentralisation and Democratisation (Singapore: Institute of Southeast Asian Studies, 2003), at 2; VICKERS, Adrian, A History of Modern Indonesia (Cambridge: Cambridge University Press, 2005) at 220.

183. See the evolution of the system under different regimes in Indonesia in PAMUNGKAS, Sri-Bintang, Regime Change and System to Master Nusantara (Indonesia: El Bisma, 2014).

184. DAVIDSON, Jamie S., HENLEY, David, and MONIAGA, Sandra, Adat in Indonesia's Politic (Indonesia: Yayasan Pustaka Obor, 2010) at ix.

185. Devi, supra note 38.

186. See a complete analysis in Arizona, supra note 112 at 1–17.

187. See the recent recommendation from the Committee on ESCR that “The Committee encourages the State party to consider signing and ratifying the Optional Protocol to the International Covenant on Economic, Social and Cultural Rights”. Committee on ESCR, “Concluding Observations on the Initial Report of Indonesia”, UN Economic and Social Council, E/C.12/IDN/CO/1, 19 June 2014, para. 41, p. 14.

188. The Committee on ESCR 2014, supra note 175 at para. 9.

189. Ibid.

190. For further discussion, see AGUSMAN, Damos Dumoli, Treaties under Indonesian Law: A Comparative Study (Indonesia: PT Remaja Rosdakarya, 2014).

191. Dewanto has criticized the report of Indonesia to the UN HR Committee that, after ratification, it is now part of Indonesia's domestic law. See DEWANTO, Wisnu Aryo, “Penerapan Perjanjian Internasional di Pengadilan Nasional: Sebuah Kritik terhadap Laporan Delegasi Republik Indonesia kepada Komite Hak Asasi Manusia Perserikatan Bangsa Bangsa tentang Implementasi Kovenan Internasional tentang Hak-hak Sipil dan Politik di Indonesia” (2014) 1 Padjajaran Jurnal Ilmu Hukum 1 at 57.

192. See more explanation on how international law has been used as a political instrument in JUWANA, Hikmahanto, “International Law as Political Instrument: Several of Indonesia's Experiences as a Case Study” (2012) 6 Arena Hukum 65.

193. JUWANA, Hikmahanto, “Pemberdayaan Budaya Hukum Dalam Perlindungan HAM di Indonesia: HAM dalam Perspektif Sistem Hukum Internasional” in Prof Dr MULADI, SH, ed., Hak Asasi Manusia, Hakekat, Konsep dan Implikasinya dalam Perspektif Hukum dan Masyarakat (Bandung: PT. Refika Aditama, 2005) at 70–5.

194. See Juwana, supra note 192 at 65–74.

195. See Law Number 39/1999 on Human Rights, and Presidential Decree Number 50/1993 on the National Commission on Human Rights.

196. For a recent example, see the case of Salim Kancil who was killed trying to protect his land in the mining area, owing to a lack of response from the authorities to a long-standing dispute between the local community and a mining company in Lumajang, East Java. See “Tumbal Darah Salim Kancil [The Bloodshed of Salim Kancil]” Detik Magazine, Edition 201 (October 2015) at 5–11.

197. SUMARDJONO, Maria S.W., Pengaturan Sumber Daya Alam di Indonesia, Antara yang Tersurat dan Tersirat [The Management of Natural Resources in Indonesia, Implicit and Explicit] (Yogyakarta: Universitas Gadjah Mada Press, 2011).

198. Samdhana, “Empowering MHA Awur to Control Resources” (9 November 2015), online: Samdhana <http://blog.samdhana.org/2015/11/09/memperkuat-kapasitas-masyarakat-adat-awur-untuk-mengelola-sumberdayanya/>.

199. Serambi Indonesia, “PKPM Held Discussion on MHA Kejereun Blang” Tribunnews (30 October 2015), online: Tribunnews <http://aceh.tribunnews.com/2015/10/30/pkpm-gelar-diskusi-tentang-keujruen-blang?page=2>.

200. Firdaus CAHYADI, “Declaration to support Jokowi-Jusuf Kala” Aman (2014), online: Aman <http://www.aman.or.id/aliansi-masyarakat-adat-deklarasikan-dukungan-kepada-jokowi-jusuf-kalla/>.

* Lecturer in Law, Syiah Kuala University, Indonesia.

** Senior Lecturer in Law, Anglia Ruskin University, United Kingdom.

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Asian Journal of International Law
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