This content is from: Local Insights

Indonesia: Forestry’s shortened permit process

Oene MarseilleEmir Nurmansyah
Indonesia has shortened its review process by 30 days for the issuance of the principal licence, considered to be the preliminary licence before the final issuance of the borrow-to-use permit (Izin Pinjam Pakai) for its forest areas. Indonesia's Minister of Forestry decreed this in its updated guidelines on the issuance of borrow-to-use permits for forest areas in Indonesia. Under the new guidelines (Regulations of the Ministry of Forestry), the principal licence review process is shortened from a maximum of 120 business days to 90 business days. The review process for the issuance of the borrow-to-use permit itself, for which the principle licence is a prerequisite, remains unchanged (a maximum review period of 90 days is prescribed). Further, the new guidelines have left untouched a bulk of the old procedures and mechanisms. For example, the provisions dealing with general application procedures, requisite supporting documents, applicant's obligations and the required compensatory actions remain the same.

The borrow-to-use permit is issued by the Minister of Forestry of Indonesia. This permit is one of the most important, yet onerous licences to obtain before conducting any natural resource exploration and exploitation activities in a forest area in Indonesia. Industries traditionally affected by this permit requirement include oil and gas, geothermal, coal and other minerals, power generation, lumber, and plantations.

Failure to obtain this required permit could lead to fines and other sanctions (including possible criminal prosecution and prison sentence for the company's directors and management, under article 78 of Law 41 1999). Because 60% of Indonesia's land area is forest, this permit should be given special consideration.

Obtaining this licence can often turn out to be a frustrating endeavor, but further reform is anticipated. The new guidelines, although far from a comprehensive reform, are a step in the right direction in simplifying the often opaque review process.

Oene Marseille and Emir Nurmansyah

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