The president has finally signed the long-awaited implementing regulation for Article 74(4) of Law on Limited Liability Companies. The regulation answers the controversial question of whether corporate social responsibility is voluntary or obligatory for companies, and has particular relevance for natural resources companies and those in related industries.
Government Regulation 42/2012 on Cross-Border Power Sale and Purchase was recently signed by the president. The regulation stipulates that cross-border electricity sale and purchase are subject to the prevailing customs laws and regulations, and must adhere to certain requirements.
The government has issued a new regulation to implement certain provisions of the Electricity Law. It covers a range of issues, including licensing and certification, land use for electrical power supply activities and the determination of sales prices, network leases and tariffs.
The Regulation on Mining Business Activities created divestment obligations for foreign shareholders of a company with a mining licence or a special mining licence. A new amendment requires a further divestment of up to 51% to an Indonesian party no later than 10 years after the start of commercial production. A number of other changes may also affect investors in the extractive industries.
Under Article 71 of the Regulation on Forest Land Use and Development of Forest Management Planning and Forest Utilisation, forest utilisation permit holders must submit a perimeter establishment plan for their work area within one year of the permit issue date. The minister of forestry has issued a regulation on boundary arrangements of working areas for forest utilisation licences.
The minister of forestry has issued new implementation regulations regarding forest land reclamation. Forest licence holders are required to prepare a five-year reclamation plan. Each plan must specify, among others things, schedule, budget, the reclamation activities and an annual reclamation plan map.
The government has taken steps to address Indonesia's declining oil production by providing fiscal incentives to oil and gas operators. It will waive value-added tax on goods imported for the purposes of upstream oil and gas activities or geothermal exploration for the budgetary year 2011.
Indonesia's director general of oil and gas has issued a decree to implement the Regulation on Oil and Gas Supporting Business Activities. It regulates the procedure whereby the Directorate General issues registration certificates to entities or individuals in the oil and gas business, and the application procedure for additional business field classification.
Together with the respective governors, regents and mayors, the minister of energy and mineral resources is tasked with fostering and supervising the activities of mining licensees. As a new regulation makes clear, the scope of the fostering and supervision obligation is broad, including technical and marketing aspects of mining operations, finance, environmental impact and operational safety.
Indonesia's declining oil and gas production has resulted in the country becoming a net oil importer. The minister of energy and mineral resources recently issued a regulation that, among other things, requires contractors to expedite submission of proposals for the development of newly discovered reserve fields and to implement plans to develop or reactivate oil fields with good production potential.