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Simplifying Energy Sector Regulations: Ministry of Energy and Mineral Resources Takes Swift Action to Accelerate Investment and Improve Public Services

  Editorial INTI     10 hari yang lalu
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Jakarta, INTI - The Indonesian government is taking bold steps to streamline regulations within the energy and mineral resources (ESDM) sector. Aligned with President Prabowo Subianto’s directive, Minister of Energy and Mineral Resources Bahlil Lahadalia has set regulatory simplification as a top priority to foster investment and improve public service delivery. During his first 100 days in office, Minister Bahlil has emphasized his commitment to addressing overlapping regulations that have impeded the investment process within the sector.

Challenges with Regulatory Complexity and Permit Overlaps

The current permitting system is one of the primary hurdles to efficiency, particularly in the oil and gas (migas) sector, where the complexity of obtaining licenses has long delayed exploration projects. For instance, prospective investors in the sector must navigate over 100 permits, leading to protracted timelines and increased operational costs. Minister Bahlil highlighted that, although the permit structure is comprehensive, inefficiencies arise from slow Service Level Agreements (SLAs) and inadequate response times from involved departments. "Imagine that just for exploration, there are still around 129 permits. We need improved SLA standards to speed up this process," he stated.

Similar regulatory complexities also plague the mineral and coal (minerba) sector, where an overlapping legal framework has created substantial obstacles for both officials and industry stakeholders. “Minerba regulations are incredibly dense and overlapping, which burdens both officials and businesses," he remarked, emphasizing the need for a streamlined regulatory approach.

Ministry of Energy and Mineral Resources Initiatives

According to Agus Cahyono Adi, Head of the Communication, Public Services, and Cooperation Bureau (KLIK) at the Ministry of Energy and Mineral Resources, regulatory simplification aims to accelerate investment processes and enhance sector-wide governance. “We’re committed to addressing regulatory overlaps to ensure that the permitting process in the migas and minerba sectors is more efficient. This has been designated as a top priority within the first 100 days of the Minister’s term,” Agus explained.

Advancing Regulatory Harmonization between Central and Regional Authorities

A significant component of the Ministry’s agenda involves harmonizing regulations between central and regional government bodies, which are often at odds with each other. This harmonization is crucial to reduce the turnaround time for permitting processes across all levels, with a target of completing the entire licensing process in under a year. "Based on the Minister's directives, we aim to streamline the licensing process across national and local levels to facilitate faster investment," Agus added.

To achieve these ambitious objectives, the Ministry is implementing a digital transformation in the permitting process to consolidate multiple permits under a single platform. This initiative aims to minimize bureaucratic delays and improve accountability. Data analytics will play a central role in monitoring the status of permits and ensuring compliance, thereby providing a clear roadmap for stakeholders throughout the investment process.

Expected Economic Impact

With these measures, the Ministry of Energy and Mineral Resources is optimistic about creating a more dynamic business ecosystem and significantly enhancing the energy sector's contribution to the nation’s economic growth. A streamlined regulatory framework is expected to attract greater foreign investment, potentially contributing to a substantial increase in GDP. The Indonesian government is also collaborating with international stakeholders to ensure that its regulatory framework aligns with global best practices.

Furthermore, the simplification process promises to reduce red tape for local businesses, empowering Indonesian companies to operate with fewer constraints. The Ministry has announced plans to regularly evaluate and further simplify regulations to keep pace with evolving investment needs within the energy sector. By doing so, the government hopes to foster a conducive business climate that will drive economic growth, innovation, and job creation in the long term.

By undertaking regulatory reform, the Ministry of Energy and Mineral Resources seeks to create a favorable investment climate and establish a robust energy sector that can sustain national economic resilience. This commitment to simplifying regulations underscores Indonesia's proactive approach to becoming an investment-friendly nation.

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