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Divestment obligation to be relaxed?

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Ginting Daniel
Daniel Ginting

Managing Partner, Ginting & Reksodiputro in association with Allen & Overy

Jakarta

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Dwitiasrini Desi
Desi Dwitiasrini

Counsel, Ginting & Reksodiputro in association with Allen & Overy

Jakarta

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06 October 2021

On 9 September 2021, the Government of Indonesia issued Government Regulation No. 96 Year 2021 on the Implementation of Mineral and Coal Mining Business Activities (GR 96/2021). 
GR 96/2021 provides further elaboration on several provisions of Law No. 3 Year 2020 (the Amendment Mining Law) including the divestment rule. Divestment now starts much later than the previous rule, which was on the sixth year of production and it starts from 5%, which is much lower than 20% under the previous regulation. The timing and the percentage of shares to be divested depends on whether the mining companies have integrated processing or refining facilities and the method of mining undertaken. Another important change under GR 96/2021 is allowing a BUMN to transfer its mining area to its subsidiary.