August 2014

Indonesian Mining Law New Regulation

Exporting Coal
August 2014
Introduction
Indonesia has issued a new regulation to tighten controls on
exports of coal and coal products, which up until now have
been relatively unconstrained by export laws and regulations.
In this briefing note, we set out a broad overview of these new
procedures. They are set out in Minister of Trade Regulation
No. 39/M-DAG/PER/7/2014 of 2014 regarding Provisions on
Coal Export and Coal Products ("Regulation") which will
come into force on 1 September 2014 (this date has very
recently been moved back to 1 October to allow the Ministry
enough time to get ready). These are supplemented by the
recently issued Director General of Minerals and Coal
Regulation No. 714.K/3-/DJB/2014 on the Procedures and
Requirements on Recommendation for Registered Exporter of
Coal.

Provisions on Coal Export

(Eksportir Terdaftar Batubara ET-Batubara) by the

Minister.
In order to do so, an application must be submitted to the
Director General of International Trade (Director General)
with the following supporting documents:
1.

Copy of the applicants Mining License;

2.

Copy of its Taxpayer Registration Number;

3.

Copy of its Company Registration Certificate; and

4.

Recommendation letter from the Director General of

Minerals and Coal ("DGMC").

In order to obtain the recommendation from the DGMC, the

company needs to submit the following documents:
1.

Copy of its Clean and Clear certificate and IUP OP / IUPK

/ IUP Refining / IUP Transport and Sales, as applicable;

2.

Copy of its Work Program and Budget (RKAB) and

approval letter;

3.

Proof of payment of non-state tax revenues for last

payment period; and

4.

Stamped statement letter confirming authenticity of all

documents and containing an undertaking to pay
production royalties before transporting goods across
internal boundaries.

Rationale
The press release accompanying the Regulation states that as
coal is a non-renewable mining product, its utilization must be
optimized for the prosperity and welfare of the people and
managed sustainably with efficiency and effectiveness.
The stated aims of the Regulation are therefore to avoid
overexploitation, to fulfil domestic need, to regulate businesses,
to ease traceability of coal products, to organize production fee
and royalty payment obligations, and to establish business
certainty and legal certainty for all mining entrepreneurs.
The press release emphasizes that the Regulation is in line
with the Mining Law, which mandates that management of
coal exports should be controlled by the State to provide
added value to the national economy.
We comment more on this at the end of this update.
General Export License

A recommendation letter will be valid for three years, but will

be evaluated each year.
The Director General will issue an ET-Batubara certificate
within 5 business days of receiving a complete application. An
ET-Batubara certificate is valid for 3 years.
This is a similar regime to the technical requirements for
export licences which had been put in place for the minerals
sector in 2012, although it lacks a number of more punitive
features of that regime.

If a company wants to export coal and coal products, then it

must first be recognized as a Registered Coal Exporter
IN ASSOCIATION WITH ASHURST

Obligation to Report
An ET-Batubara certificate holder must submit written reports
on all exports of coal products, on the fifteenth date of every
month to the Director General of Export of Industrial and
Mining Products, or through the INATRADE web portal
(http://inatrade.kemendag.go.id). INATRADE is an electronic
system administered by the Ministry of Trade that processes
international trade related matters, such as import and export
approvals and licenses.

The costs of verification and examination will be charged to

the State. If the State's fund is not available, then all the costs
will be borne by the exporter. It is not clear at this stage what
"not available means", although the risk is clearly on the
exporter.
Surveyor
A surveyor must:
1.

have a Surveyor Service Business License (Surat

Ijin Usaha Jasa Survey SIUJS);

Before being loaded and shipped, exported coal products must

be verified and examined by a surveyor appointed by the
Minister. The exporter must first file an application with a
surveyor.

2.

have 5 years of experience in verifying and

examining coal product exports;

3.

have at least 5 branch offices in Indonesia;

The surveyor will then verify and examine the coal products
intended to be exported covering:

4.

employ experts that are certified as verifiers, drafters,

laboratory analysts, and geologists;

Verification and Examination Process

1.

administrative requirements, quantity and area of

origin;

5.

have at least 3 accredited laboratories with different

work areas; and

2.

type and specification; and

6.

have a suitable track record in verifying and

examining coal products exports.

3.

shipping schedule and loading port.

The exporter must provide the following information to the

surveyor:

The surveyor must deliver each LS through the INATRADE

web portal.
In addition, the surveyor must submit a monthly report on
verification and examination of the coal exporter, to the
Director General of Export of Industrial and Mining Products,
and the Director of Coal Business Development of MEMR.

1.

origin;

2.

type, quantity, and tariff classification;

3.

total calories of coal products which are listed in

Appendix II of the Regulation;

Revocation of ET-Batubara Status

4.

shipping schedule;

ET-Batubara status can be revoked by Director General if:

5.

loading port;

6.

port destination and state destination; and

7.

receipt or proof
dues/royalty.

of

payment

of

1.

the supporting documents used to obtain ETBatubara status were forged or illegal;

2.

the exporter did not submit a written report to

Director General on three occasions;

3.

the exporter adds, modifies, or counterfeits the

information contained in a ET-Batubara certificate;

4.

the exporter exported a quantity of coal products not

in accordance with the quantity in the reporting
document; or

5.

a court finds the exporter is guilty of a criminal

offense related to the misuse of a ET-Batubara
certificate.

production

The verification and examination process takes 1 day to

complete and the result will be set out in a surveyor report
(Laporan Survei "LS"). The surveyor report and the ETBatubara certificate are mandatory requirements for
registration of an export notification (Pemberitahuan Ekspor
Barang "PEB") for exporting coal products.
An LS that can only be used for one shipment, and one
registration of a PEB.

An exporter which has its ET-Batubara revoked may re-apply

for it one year after the date of revocation.
Dismissal as Surveyor
A surveyor may also be dismissed if it:
1.

creates a LS that is not in accordance with the

Regulation;

2.

does not deliver each LS to the INATRADE web

portal;

3.

does not fulfil its obligation to submit a written

monthly report;

4.

publishes less than 20 LSs within one year; or

5.

publishes an LS for the export of prohibited products.

Other provisions
Existing Contracts of Work remain valid and can be used as
the basis for securing an ET-Batubara certificate in
accordance with the Regulation.
The Regulation will revoke the previous 2008 provisions on
verification and technical examination of exported coal.
Conclusion
The Regulation is particularly interesting because it is the first
explicit attempt to control the export of coal through a licensing
regulation. The Government has considered numerous
measures before, including a prohibition on the export of coal
below a specified calorific value. In general, these provisions
have not been passed due to opposition from the coal industry.
Although the Regulation adds a significant administrative
burden, it does not raise explicit new substantive barriers to
exporting coal. What it does do, indirectly, is give central
government a greater change to regulate the coal tenements
themselves. Legislation pushes governance of coal tenements
down to regional rulers, and Central Government's ability to
control tenements who breach their mining licenses or other
laws is therefore more limited. Because an exporter can only
get ET-Batubara status with a recommendation from the
DGMC, Central Government now has a mechanism to prevent
non-performing tenements from being permitted to export.
This system also makes it easier for the government to
introduce more onerous requirements in the future, by adding
to the conditions required to obtain an export permit. Coal
exporters and international buyers will therefore be hoping that
the Regulation represents the limit of the Government's
ambitions to control coal export.

Key contacts
Sean Prior
Partner, Ashurst Singapore
(Solicitor of the Senior Courts of England and Wales)
E: sean.prior@ashurst.com

Randy Rifdaan
Senior Associate, Oentoeng Suria & Partners

E: randy.rifdaan@oentoengsuria.com

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