Certain business activities in Indonesia which impact the environment require an environmental licence. The approval process for such a licence involves three stages.

  1. Drafting an Environmental Impact Analysis (AMDAL) or Environmental Management Efforts and Environment Monitoring Efforts (UKL-UPL);
  2. Evaluation of the AMDAL or UKL-UPL and obtaining an AMDAL approval or UKL-UPL recommendation; and
  3. Application for an Environmental Licence.

The application for the Environmental Licence will be submitted to the relevant level of government; either the national Minister for the Environment, the Governor of the relevant Province or the Regent/Mayor of the relevant regency/city.

AMDAL

Indonesia’s Environment Law provides that an AMDAL is required for those businesses and/or activities which, amongst other things:

  • change the form and contour of the environment;
  • exploit a natural resources (renewable or non-renewable);
  • may cause environmental pollution and/or damage and/or degradation of natural resources;
  • result in natural and artificial environmental, social and cultural impacts;
  • impact the sustainability of a natural resource conservation area and/or the protection of cultural heritage;
  • introduce new species of plants, animals and micro-organisms;
  • produce and utilise natural or non-natural raw material;
  • are high risk activities and/or impact State defence; and/or
  • implement new technology which is predicted to have a large impact on the environment.

A Ministerial Environmental Decree also sets out certain businesses and/or activities which require an AMDAL.

Businesses and/or activities that impact the environment but which are not identified as requiring an AMDAL under the Environment Law (including in the Environmental Decree) must prepare a UKL-KPL.

An AMDAL document consists of:

  • the Terms of Reference;
  • an Environmental Impact Statement (ANDAL); and
  • an Environmental Management Plan and Environmental Monitoring Plan (RKL-RPL).

The document must be prepared by a certified AMDAL consultant.

As part of the AMDAL documents, an activities plan must be prepared and publicly announced.  The public must be given 10 business days to provide feedback on the activities plan.

The AMDAL will be evaluated by the AMDAL Evaluation Commission (Komisi Penilai AMDAL) established at the relevant level of government, which will issue a recommendation to that government. 

Theoretically, the Commission’s evaluation should take 125 business days (including the 10 business days for public feedback), however in practice it may take much longer.

UKL-UPL

A UKL-UPL is required for certain business activities which have a lesser, or no significant, impact on the environment, but which still require environmental approval.

A UKL-UPL has a prescribed form, which includes:

  • the activities plan;
  • the environmental impact; and
  • the environmental management and monitoring program.

The UKL-UPL is submitted to the relevant level of government and, according to the environment regulations, a decision to recommend or reject the UKL-UPL should take only take 14 business days. Once again, in practice the process may take longer.

Some businesses or activities (or both) do not require either an AMDAL or a UKL-UPL, but these must submit a Statement of Ability to Manage and Monitor the Environment (SPPL) to the relevant level of government.  There is no specified timeframe for approving an SPPL application.

Environmental Licence

Once an AMDAL or UKL-UPL is approved, an application must be submitted for an Environmental Licence, which requires:

  • the AMDAL approval or UKL-UPL recommendation;
  • the Company’s Deed of Establishment; and
  • a company or activities profile.

After submission of complete documents, the relevant government is required to announce the application for public feedback of 10 business days for AMDAL applicants and 3 business days for UKL-UPL applicants.

If a proponent obtained its AMDAL approval or UKL-UPL recommendation before 23 February 2012, the proponent is not required to obtain an Environmental Licence (with the approval or recommendation treated as the Environmental Licence).

Compliance obligations

The holder of an Environmental Licence must:

  • comply with the terms and conditions of the licence;
  • report on compliance with the terms and conditions every 6 months; and
  • provide collateral funds for any potential environmental restoration.

Breach of an Environmental Licence may result in sanctions including written warnings, suspension or revocation of the business licence, and enforced cessation of all activities and environmental restoration. 

A breach may also constitute an act of environmental pollution which is a breach of the Environment Law itself, giving rise to civil and criminal penalties.

Importantly, the AMDAL approval or UKL-UPL recommendation process involves dialogue between the proponent and the relevant level of government, which should result in terms and conditions which are mutually acceptable. If compliance with such terms and conditions proves difficult, or circumstances otherwise change, the proponent can seek amendments to the AMDAL or UKP-UPL documents. As such, we are not aware of any high-profile projects which have not proceeded on environmental grounds or have been suspended or revoked because of a breach of the relevant AMDAL or UKP-UPL documents or an Environmental Licence.