Indonesia Mandates 70% State Share of Mining Proceeds, Potential State Control
What happened
President Prabowo Subianto stated that the state should secure a greater share of benefits from all mining permits, and if necessary, hold controlling stakes in mining assets. He specified that at least 70% of the proceeds from mining permit management must benefit the state. This follows earlier discussions about a gross-split scheme, which Energy Minister Bahlil Lahadalia said was dropped in June after consultations with Prabowo Subianto.
From thestar.com.my
Why it matters
The mandate requires the state to secure a dominant share of mining profits, shifting fiscal policy in the resource sector. The policy aims to ensure that profits predominantly benefit the Indonesian people, despite Indonesia remaining open to investors.
From thestar.com.my
Who's involved
- Prabowo SubiantoPresident of the Republic of Indonesia who mandated the policy change.
- IndonesiaThe nation where the mining policy change is being implemented.
- Bahlil LahadaliaEnergy Minister who previously stated a related gross-split proposal was dropped.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
The Ministry of Investment and Downstream Industry might face severe impacts on investment viability and returns due to the mandate for state control.
- Ministry of Energy and Mineral ResourcesSpeculative
The Ministry of Energy and Mineral Resources may be required to enforce the new mandate requiring 70% state benefit in mining permits.
- Investment Coordinating BoardSpeculative
The Investment Coordinating Board might face challenges related to investment viability and returns under the new regulatory action.
Possible ripples
Who this could reach next, traced step by step from the reporting. Possibilities worth considering, not forecasts.- Mining state control mandate may curb investment in IndonesiaState control mandate may reduce investment viability for Indonesia's mining sectorLikely
- State mandate could significantly alter the finance ministry's revenue planningState mandate could significantly alter the finance ministry's revenue planning.Likely
- Ministry of Energy and Mineral Resources must enforce new state mining controlMinistry of Energy and Mineral Resources must enforce new 70% state benefit ruleLikely
- New state control rules may change investment coordination for IndonesiaThe Investment Coordinating Board must adapt to new state control rules for mining.Possible
- New mining mandates could influence Bank Indonesia's monetary policyBank Indonesia may face shifts in monetary policy due to new mining revenue mandatesPossible
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The entities involved
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Prabowo Subianto
President of the Republic of Indonesia
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Indonesia
island country in Southeast Asia and Oceania