Mining regulatory: Enforcing the new government regulation against company resistance

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Abstract

The low contribution of the mining sector to state income has encouraged the Indonesian government to optimize profits. Mining regulatory governance reform must be implemented. Government Regulation No. 1 of 2017 is a step to strengthen the role of the government, the legislative body which has the authority to manage and regulate natural resources. However, PT Freeport Indonesia (PTFI) opposes the implementation of this policy. Consequently, this research aims to explore and analyze the enforcement of Indonesian government regulations in the mining sector. This research uses a qualitative approach and case study method. The data selection is prepared in a structured, systematic and structured manner. The results contain several vital pieces of information. PTFI’s non-compliance reached a breaking point, such as a ban on export permits to provide a deterrent effect. Following these sanctions against mining companies, the government began the negotiation process. These strategies manifest the Indonesian government’s seriousness, resulting in PTFI’s agreement with regulations. Government efforts to combine punishment and persuasion in regulatory enforcement practices are discussed in this research. The paper provides scholarly discussions, guiding authoritarians to achieve stakeholder compliance with their laws and policies.

Keywords: Mining Regulatory, Regulatory Enforcement, Government Authority, PT Freeport Indonesia

Authors’ individual contribution: Conceptualization — D.S.S.; Methodology — M.N.H.; Validation — D.S.S., F.P., and J.P.K.; Formal Analysis — D.S.S. and M.N.H.; Writing — Original Draft — D.S.S. and M.N.H.; Writing — Review & Editing — F.P. and J.P.K.; Supervision — D.S.S.; Project Administration — D.S.S.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: F51, G38, K23, L51, L78

Received: 21.01.2024
Accepted: 30.12.2024
Published online: 02.01.2025

How to cite this paper: Sarwosaputro, D. S., Huda, M. N., Pratama, F., & Krisnawan, J. P. (2025). Mining regulatory: Enforcing the new government regulation against company resistance. Journal of Governance & Regulation, 14(1), 18–28. https://doi.org/10.22495/jgrv14i1art2