Draft Mining Business Employees, Goods, and Services Procurement Regulation

• Author: William A. Sullivan/Christian Teo Purwono & Partners
• Profession: Licensed Foreign Advocate in Indonesia as well as a Solicitor of the Supreme Court of New South Wales
• Pages: 347-362

CHAPTER 24

Draft Mining Business Employees,

Goods, and Services

Procurement Regulation

I. Executive Summary

1. Overview

1.1 An advanced draft of the Mining Business Employees, Goods and

Services Procurement Regulation (hereinafter referred to as “Draft

EG&S Procurement Regulation”) has been circulated by way of

the intended implementation of Article 88 of GR 23/2010.

1.2 At this time, it is not possible to say when the Draft EG&S Pro-

curement Regulation will be finalized and issued.

2. Approach

2.1 Employees: Mining companies are obliged to prioritize the

employment of Indonesian workers.

2.2 Employee procurement is to be managed so as to (i) to empower

and utilize local employees optimally and humanely; (ii) equalize

working opportunities according to the needs of national and

regional development; (iii) give protection to employees, (iv) increase

the welfare of employees and theirfamilies and (v) increase employee

competency in mining business activities.

2.3 Establishment of the mining company organizational structure and

any changes to the mining company organizational structure require

prior approval from the Relevant Government Authority.

347

2.4 Foreign employee procurement plans or RPTKA should be made to

facilitate access to and mastery of technology in minerals and coal

mining.

2.5 Every foreign employee must have an Indonesian employee partner

one organizational structure level below the foreign employee in the

mining company’s organizational structure.

2.6 The person in charge of field personnel may not be a foreign

employee.

2.7 Mining companies wanting to hire foreign employees must hold an

RPTKA Authorization from the Minister of Manpower (“MoM”).

2.8 Mining companies are obliged to provide an education and training

program plan for all foreign employees for the purpose of intro-

ducing the law and culture of Indonesia to foreign employees.

2.9 Goods and Services: Mining companies must prioritize the pur-

chase of commodities, equipment, raw materials, and other sup-

porting materials that are either produced locally or imported and

sold in Indonesia.

2.10 In order to support their activities, mining companies may make

application for the right to import goods: (i) according to a Master

List; (ii) on a temporary import basis; and (iii) that have been

remanufactured and/or reconditioned.

2.11 Commodities, goods, raw materials, and other supporting materials,

not being utilized anymore by mining companies, may be the subject

of application for (i) removal and/or utilization (i.e., handing over,

donation, destruction); (ii) re-export; or (iii) disposal.

2.12 Mining companies that make application, in respect of imported

goods, for (i) removal and/or utilization, (ii) re-export, or (iii) dis-

posal, must obtain a recommendation from the Relevant Govern-

ment Authority before making the application.

2.13 Relevant Government Authority: The Relevant Government

Authority may carry out, on a gradual basis, the development

and supervision of (i) employee procurement and (ii) the purchasing

of commodities, equipment, raw materials, and other supporting

materials.

3. Sanctions

The Relevant Government Authority is entitled to impose administrative

sanctions on mining companies that violate the Draft EG&S Procurement

Regulation.

348 Mining Law & Regulatory Practice in Indonesia