Jakarta, February 1, 2023—The Perpu on the Job Creation Law has raised concerns about its negative impacts on the economy, energy security, and the environment, particularly Article 128A, which sets royalties on coal downstreaming at 0%. CELIOS Executive Director Bhima Yudhistira stressed, “Assuming total coal production of 666.6 million tons per year, potential royalty losses are estimated at Rp33.8 trillion annually. If the policy remains in effect for the next 20 years, the state is estimated to suffer losses of up to Rp676.4 trillion. Therefore, implementation of the Perpu on Job Creation must be firmly canceled.”
CELIOS Legal Researcher Muhammad Saleh added that the Perpu on Job Creation does not support the energy transition because “the Perpu has no environmental assessment basis. The energy transition commitments made at the G20 Bali Summit are not accommodated. The Perpu weakens equitable energy transition policies.” Several other provisions are also considered problematic, including reduced public participation in environmental impact assessments (Amdal), repressive rules targeting mining activists, and the removal of incentives for the transition to renewable energy.
CELIOS research shows that 0% royalties on coal downstreaming would contribute to a budget deficit, reduce revenue-sharing transfers to regions that produce natural resources, and prolong Indonesia’s dependence on fossil fuels. This policy also risks prompting banks to refocus on the coal sector, reducing lending to sectors that support the energy transition. In addition, claims that Dimethyl Ether can replace LNG imports are economically questionable, pointing to a false solution in energy efficiency.
The Government’s Job Creation Law (Perpu Cipta Kerja) raises concerns over its negative impacts on the economy, energy security, and the environment, particularly Article 128A, which sets coal downstreaming royalties at 0%. CELIOS Executive Director Bhima Yudhistira stated, “Assuming a total coal production of 666.6 million tons per year, the potential loss of royalties is estimated at IDR 33.8 trillion annually. If this policy continues for 20 years, the state could face losses of up to IDR 676.4 trillion. Therefore, the implementation of the Job Creation Law must be firmly canceled.”
CELIOS Legal Researcher Muhammad Saleh added that the law does not support energy transition because “the law lacks an environmental assessment basis. The G20 Bali energy transition commitments are not accommodated. The law weakens equitable energy transition policies.” Other problematic provisions include reduced public participation in environmental impact assessments, repressive norms for mining activists, and the removal of incentives for renewable energy transition.
CELIOS research shows that the 0% coal downstreaming royalty policy would increase the budget deficit, reduce revenue-sharing transfers to resource-producing regions, and prolong Indonesia’s dependence on fossil fuels. The policy also risks redirecting banking credit back to the coal sector, limiting funding for sectors that support energy transition. Moreover, claims that Dimethyl Ether could replace LNG imports are economically questionable, highlighting a false solution in energy efficiency.