[JAKARTA] Indonesia rolled out a sweeping crackdown on illegal mining a week ago, giving the state power to seize and run and run rogue concessions, in what is billed as President Prabowo Subianto’s wider anti-corruption drive amid a politically charged climate.
The operation allows the state to take over illegal mining concessions and channel revenues directly into the national budget; but analysts and environmental groups caution it may yield only modest fiscal gains and little improvements in environmental protection.
In a report released on Sep 3, BMI, a unit of Fitch Solutions, said the campaign aligns with Prabowo’s “nominally aggressive approach to corruption”, but cautioned that it is unlikely to significantly curb illicit activity in the mining sector.
BMI noted that “persistently weak environmental governance in Indonesia – enabled by weak state institutions, regulatory red tape and corruption – will likely hinder the planned operation against illegal mining and broader reform efforts, even as the government seeks to move Indonesia’s mining industry up the global value chain”.
For foreign investors, the crackdown is likely to be taken with a pinch of salt.
Bill Sullivan, senior foreign counsel at law firm Christian Teo & Partners, suggested that many view the recent move as more symbolic than substantive.
A NEWSLETTER FOR YOU
Friday, 8.30 am
Asean Business
Business insights centering on South-east Asia’s fast-growing economies.
“Foreign investors in the local mining industry are, by and large, a hardy bunch who have already ‘seen it all’ in terms of the myriad problems the local mining industry faces,” he said. “I don’t think they will take much notice of the government’s posturing about eliminating illegal mining.”
In his Independence Day address on Aug 15, Prabowo pledged to crack down on the illegal exploitation of natural resources, calling for greater involvement of the military and police in enforcement efforts.
Mining in forest areas without proper permits, or beyond permitted boundaries, is considered illegal by the Indonesian government. A forestry task force, comprising officials from the police and Attorney General’s Office of Indonesia, has identified 4.2 million hectares (ha) of forest land used for such illegal activities.
Deputy Attorney-General for Special Crimes Febrie Adriansyah recently said the income from these state forest areas will be temporarily overseen by the Ministry of State-Owned Enterprises.
The recent crackdown on illegal mining echoes a similar government initiative from March 2025, when authorities took aim at unlicensed palm oil plantations.
During that operation, the task force seized over one million ha of land classified as illegal, half of which is now managed by the state plantation firm, Agrinas Palma Nusantara.
Profit over green
While officials tout the initiative as part of Prabowo’s broader fight against corruption and resource mismanagement, environmentalists caution it may prioritise revenue collection over meaningful environmental restoration.
The campaign on palm oil saw seized farmlands nationalised, but an analysis by the Indonesian Forum for the Environment (Walhi) said the crackdown disproportionately affected smallholders, local communities and indigenous groups, while the assets of large corporations were largely spared.
Walhi’s mining and energy campaign manager, Rere Christanto, argued that the government’s current approach amounts to a rebranding of existing practices to bolster state revenue, rather than a genuine effort to restore the environment.
He cited Indonesia’s Omnibus Law on Job Creation, which allows companies operating in forest areas without permits to retroactively legalise their activities.
In practice, this means companies that have encroached on forest land can simply regularise their operations administratively and continue, effectively legitimising corporate violations.
“Permits, which should be a preventive and controlling mechanism, are increasingly reduced to a mere administrative system for collecting fees or extracting profits from natural resources, without accounting for the damage caused,” said Christanto.
He added that structural weaknesses in law enforcement and governance continue to pose a major barrier, citing the 2020 revision of the Mining Law, which centralised authority under the central government.
“Jakarta does not have the local structures to monitor mining activities effectively,” he said. “The number of inspectors is inadequate, and with authority stripped from regional governments, they often wash their hands of responsibility.”
As a result, monitoring remains weak and regulatory loopholes persist, said Christanto.
Land management, ownership and usage have long been highly politicised and sensitive issues in Indonesia, with disputes among local communities often arising and at times turning violent.
A recent crackdown on unlicensed gold mining in Bengkayang in West Kalimantan turned chaotic after clashes broke out between residents and local police, according to a report by the Kompas news agency.
The mining crackdown is also unfolding against a backdrop of protests across several Indonesian cities over revelations of high housing allowances for lawmakers. BMI warned that the corruption-related polarisation could continue to influence policymaking, occasionally fuelling street demonstrations.
