Rent Use Permit 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: 429-450

CHAPTER 30

Rent Use Permit Regulation

I. Executive Summary

1. Overview

The Rent Use Permit Regulation (hereinafter referred to as “MoFORR 18/

2011”) was issued with legal effect from March 30, 2011, and by way of the

implementation of Article 3(3), Article 6(4), Article 7(3), Article 8(2), Article 9

(3), Article 14, Article 19(3), Article 22, and Article 24 of GR 24/2010.

2. Approach

2.1 Permitted Utilization: Rent Use Permits authorize the utilization of

(i) Production Forests and (ii) Protected Forests for nonforestry

activities, including general mining activities.

2.2 Categories: Rent Use Permits are now divided into two types being:

a. Rent Use Permits for Survey or Exploration, which are valid for

two years (and extendable); and

b. Rent Use Permits for Other Activities (i.e., exploitation activity),

which are valid for the same period as the underlying business

license (e.g., IUP or CoW).

2.3 Issuing Authority: Except in very limited situations, Rent Use

Permits are issued by MoFOR.

2.4 Size: 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.

2.5 Application: In order to obtain a Rent Use Permit, a party must, first,

submit an application to MoFOR and fulfill a number of adminis-

trative and technical requirements.

2.6 If the Rent Use Permit applicant fulfills the subject administrative and

technical requirements, MoFOR will issue to the Rent Use Permit

429

applicant, in the first instance, an Approval-in-Principle License with

a maximum validity period of two years, which is extendable, sub-

ject to evaluation.

2.7 Approval-in-Principle: The Approval-in-Principle License is to be

issued, if at all, within three to four months of completion of the

administrative and technical requirements.

2.8 The Approval-in-Principle License will specify a number of obliga-

tions that need to be fulfilled by the Rent Use Permit applicant for the

purpose of obtaining the Rent Use Permit. Once the Approval-in-

Principle License holder fulfills the obligations stated in the

Approval-in-Principle License, MoFOR will grant a Rent Use Permit

to the Approval-in-Principle License holder.

2.9 Rent Use Permit: The Rent Use Permit is to be issued following

submission of an application after fulfillment of the Approval-in-

Principle License obligations and, if at all, in (i) four months for

Exploration Rent Use Permits and (ii) two months for Exploitation

Rent Use Permits.

2.10 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

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 Nontax 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.

2.11 In the case of a Production Forest that is already the subject of a

Timber Utilization Business License, Rent Use Permits for mining

activities may be granted only for a maximum of 10% of the total area

covered by the Timber Utilization Business License.

2.12 In the case of a Production Forest Area that is not the subject of any

Timber Utilization Business License, Rent Use Permits for mining

activities may only be granted for a maximum of 10% of the total

Production Forest.

2.13 Rent Use Permits for mining activities, in a Protected Forest,

may only be granted for a maximum of 10% of the total Protected

Forest.

430 Mining Law & Regulatory Practice in Indonesia