Executive Summary of Forestry Regulation on Guidance Re Rent Use Permits For Forest Areas
by: CHRISTIAN TEO Purwono & Partners
Friday, May 27 2011 - 02:24 AM WIB
This Summary & Analysis is intended as an overview only of Ministry of Forestry (?MoFor?) Regulation No. P/18/Menhut-II/2011, dated 30 March 2011, re Guidance in respect of Rent Use Permits for Forest Areas (?MoFor Regulation 18/2011?).
This Summary & Analysis reflects our current understanding only of MoFor Regulation 18/2011 and is subject to change as that understanding develops and evolves.
Many of the points made in this Summary & Analysis are necessarily speculative in nature and subject to further clarification and confirmation. Accordingly, it would be prudent not to rely solely on this Summary & Analysis but, rather, to seek specific legal advice with respect to any issue concerning MoFor Regulation 18/2011 before making a material business decision regarding the same. CHRISTIAN TEO PURWONO & Partners would be pleased to assist you in this regard. Our contact details are set out below.
Address : CHRISTIAN TEO PURWONO & Partners
The Indonesia Stock Exchange Building
Tower II Floor 14 Suite 1405
Sudirman Central Business District
Jakarta 12190
INDONESIA
Telephone : [62-21] 515 0280
Facsimile : [62-21] 515 0281
Please contact, in the first instance, Mr. Bill Sullivan, Licensed Foreign Advocate (email:
bsullivan@cteolaw.com and mobile: [62-21] 81585060978) or Ms. Nurvita Kristianty Siregar, Senior Associate (email: nksiregar@cteolaw.com and mobile [62-21] 818482777).
EXECUTIVE SUMMARY
1. Rent Use Permits authorize the utilization of (i) Production Forest Areas and (ii) Protected Forest Areas for non-forestry activities, including general mining activities.
2. Rent Use Permits are now divided into 2 types being:
(a) Rent Use Permits for Survey or Exploration Activity (?Exploration Rent Use Permits?), which are valid for 2 years (and extendable); and
(b) Rent Use Permits for Other Activities (i.e., exploitation activity) (?Exploitation Rent Use Permits?), which are valid for the same period as the underlying business license (e.g., IUP, or CoW).
3. Except in very limited situations, Rent Use Permits are issued by MoFor.
4. According to MoFor, there is no express limitation on the size of the area which may be covered by an Exploration Rent Use Permit. However, certain limitations may apply, on a case by case basis, subject to evaluation and consideration by MoFor.
5. In order to obtain a Rent Use Permit, a party must, first, submit an application to MoFor and fulfill a number of administrative and technical requirements.
6. If the Rent Use Permit applicant fulfills the subject administrative and technical requirements, MoFor will issue to the Rent Use Permit applicant, in the first instance, an Approval in Principal License with a maximum validity period of 2 years which is extendable, subject to evaluation.
7. The Approval in Principal License is to be issued within 3 to 4 months of completion of the administrative and technical requirements.
8. The Approval in Principal License will specify a number of obligations that need to be fulfilled by the Rent Use Permit applicant for the purpose of obtaining the Rent Use Permit. Once the Approval in Principal License holder fulfills the obligations stated in the Approval in Principal License, MoFor will grant a Rent Use Permit to the Approval in Principal License holder.
9. The Rent Use Permit is to be issued following submission of an application after fulfillment of the Approval in Principal License obligations and in (i) 4 months for Exploration Rent Use Permits and (ii) 2 months for Exploitation Rent Use Permits.
10. A Rent Use Permit applicant must meet a compensation requirement as follows:
(a) if the total Forest Area in the relevant Province, where the target Forest Area is situated, comprises less than 30% of the total Provincial land area (including islands and rivers), then the applicant must provide compensation land in certain ratios depending on the purpose of the activities to be conducted in the Forest Area; and 11WAS065 02 4
(b) if the total Forest Area in the relevant Province, where the target Forest Area is situated, comprises more than 30% of the total Provincial land area (including islands and rivers), the applicant is obliged to pay Non Tax State Revenue in respect of Forest Area Utilization and carry out reforestation in certain ratios depending on the purpose of the activities to be conducted in the Forest Area.
11. In the case of a Production Forest Area that is already the subject of a Forest Utilization Business License, Rent Use Permits for mining activities may only be granted for a maximum of 10% of the total area covered by the Forest Utilization Business License.
12. In the case of a Production Forest Area that is not the subject of any Forest Utilization Business Licenses, Rent Use Permits for mining activities may only be granted for a maximum of 10% of the total Production Forest Area.
13. Rent Use Permits for mining activities, in a Protected Forest Area, may only be granted for a maximum of 10% of the total Protected Forest Area.
14. The ?10% restriction?, in points 11, 12 and 13 above, does not apply to Rent Use Permits in respect of Exploration Activities.
15. In addition to the relevant utilization activities (i.e., general mining activities), a Rent Use Permit also gives the holder the right to carry out land clearance and deforestation activities.
16. A party is not allowed to transfer its Rent Use Permit to another party without prior approval from MoFor.
17. Transfers of Rent Use Permits will be approved within 2 months of the transfer application being submitted.
18. Renewals of the Rent Use Permits will be approved within 2 months of the renewal application being submitted.
19. MoFor Regulation 18/2011 is intended to remove much of the uncertainty and reduce much of the delay which is presently associated with obtaining a Rent Use Permit. However, whether or not these objectives are realized depends very much on how MoFor Regulation 18/2011 is implemented in practice. (ends)