LEGAL CERTAINTY FOR FOREIGN INVESTORS IN COAL MINING IN INDONESIA

Since 2009, there have been significant regulatory changes in coal mining in Indonesia, beginning with the enactment of Law No.4 of 2009 concerning Mineral and Coal Mining, which replaced the prior system of contracts and mining authorizations (Kuasa Pertambangan; KP) with mining business permits (Ijin Usaha Pertambangan; IUP). There are two types of IUP: exploration and production operation. Then, the mechanism of Clean and Clear was created to reduce the large numbers of overlapping licenses. This article explores Indonesian regulatory changes and court rulings in coal mining and clarifies share divestment requirements for foreign investors in Indonesian coal-mining operations, which should not be classified as indirect expropriations.


I. INTRODUCTION
Mining regulations in Indonesia have developed significantly from the Dutch Indie regime until the present. The Indische Mijnswet of 1899-the law on mining under Dutch governance-marked the beginning of discriminatory mining regulations that favored Dutch investors, but treated groups of native peoples as societies of lower worth; this treatment was clearly disadvantageous to the Indonesian people. After Indonesia's declaration of independence in 1945, it began to introduce mining regulations that reflected the provisions of Article 33 paragraph (3) of the Indonesian Constitution (UUD 45). 1 The first action undertaken by the Indonesian Government to reduce anti-native bias in mining legislation was to issue Government Regulation in Lieu of Law No. 37 of 1960 concerning Mining, preventing foreign investors from investing in the mining sector. However, when Law No. 1 of 1967 concerning Foreign Investment was enacted, opportunities opened up for foreign investment in Indonesia; this led to the enactment of the new Law No. 11 of 1967 concerning the Basic Provisions of Mining, the main principle of which was to centralize authority over mining in the central government. 2 According to Article 4 (1) of that Law, mining authorization for Type A and Type B minerals was under the authority of the central government.
During the period of reformation, which saw increased regional autonomy, the centralization paradigm of Law No. 11 of 1967 was no longer suitable. The enactment of Law No. 22 of 1999 concerning Regional Governance commenced the principle of regional autonomy. 3 This brought fundamental changes to governance in Indonesia 4 and transferred most administrative authority over mining to the regional governments, at least in theory. 5 The Indonesian Government issued Government Regulation No. 75 of 2001 concerning the Second Amendment on Government Regulation No. 32 of 1969 concerning the Implementation of Law No. 11 of 1967 concerning the Basic Provisions of Mining. This regulation was issued to accommodate the spirit of regional autonomy as intended by Law No. 22 of 1999 concerning Regional 1 Tri HAYATI, "Authority for Mineral and Coal Management in the Era of Regional Autonomy and Its Implications in view of Article 33 paragraph (3) of the 1945 Constitution" (2014) 4 Indonesia Law Review 2 p.254. 2 Ibid. 3 Law No. 22/1999 concerning Regional Governance was revoked by Law No. 32/2004 concerning Regional Governance. Law No. 32/2004 concerning Regional Governance was then amended several times, and it was ultimately repealed in 2014 by Law No. 23/2014 concerning Regional Governance. 4 Gabriel Almond and Bingham Powell claim that a system starts and ends somewhere; for its part, Indonesia experienced a total reformation (reformasi) of its political system in 1998. It was started by the resignation of President Suharto, which ended the New Order Leadership. See Budi WINARNO,

Sistem Politik Indonesia Era Reformasi [The Political System of Indonesia in the Era of Reformation]
(Yogyakarta: Media Pressindo, 2007) pp.6-7. This reformation significantly changed Indonesia's governance paradigm from centralized to decentralized; therefore, most of the authority of the central government has been transferred to regencies and municipalities. See Kurniasih, Tahun 2014 tentang Pemerintahan Daerah (The Implementation of Law No. 23 of 2014 concerning Regional Governance), pp.3-5, 10 at https://www.slideshare.net/AksiSETAPAK/dirjen-otdakemendagriimplementasiuu23tahun2014, accessed September 19, 2019, at 08.37 am of Western Indonesian Time. 5 HAYATI, supra note 1 pp. 254-255. Governance. Under Government Regulation No. 75 of 2001, mining authorizations (kuasa pertambangan; KP) were granted by the regents, mayors, governors, and ministers in accordance with their respective authorities. 6 In Indonesia, a Government Regulation has lower-level than an Act. 7 Law No. 11 of 1967 clearly regulated that the central government granted all the mining authorizations. Government Regulation No. 75 of 2001, on the basis of Law No. 22 of 1999, regulated that mining authorizations were granted by the minister, governor, regents, and mayors in accordance with their authorities, respectively. Government Regulation No.75 of 2001 raised the significant legal issue as to whether a lower-level regulation could override a higher-level regulation, and this will be discussed further below. 8 Many inconsistencies regarding the administration of mining authorities remained until the enactment of Law No. 4 of 2009 concerning Mineral and Coal Mining, 9 which resulted in significant regulatory changes for the management of coal mining. The old mining law, Law No. 11 of 1967, was based on a system of contracts and mining authorization (KP); however, Law No. 4 of 2009 is based on two types of mining business permits (Ijin Usaha Pertambangan; IUP), one for exploration and one for production operation.
Though significant, these changes did not resolve all the existing legal problems, including overlapping licenses. Furthermore, the clean and clear (CnC) mechanism was created by the government of Indonesia because of the large number of overlapping licenses. In relation with the overlapping licenses, the question ultimately remains: how does the Indonesian Court make decisions concerning overlapping licenses? Then, Law No. 4 of 2009 and the regulations implementing it raised a new legal issue because it requires divestiture of shares for foreign investment in mining; however, the percentage of shares to be divested is regulated by the implementing regulations. This raises the question of whether the percentage of the obligatory divestment, which is not regulated by the Act, could be classified as an indirect expropriation. 6 The government of Indonesia is divided into the following levels: (a) the central government, led by the President; (b) the provinces, headed by governors, divided into regencies (kabupaten), municipalities (kotamadya), and special areas (kawasan khusus); (c) the regencies, headed by regents (bupati), divided into districts (kecamatan), villages (desa), special areas (kawasan khusus), and urban areas (kawasan perkotaan); (d) the municipalities, headed by mayors (walikota), divided into districts (kecamatan) ; (e) the districts (kecamatan), headed by district heads (camat), divided into sub-districts (kelurahan)/ villages (desa); (f) the sub-districts (kelurahan), headed by sub-district chiefs (lurah); (g) villages (desa), headed by village chiefs (kepala desa) and (e) four regions that possess special status and are granted special autonomy. See Andrew I. SRIRO, Sriro's Desk Reference of Indonesian Law (Jakarta: Sriro, 2011)  concerning Making Rules provides that the power of rules is in line with the hierarchy as regulated in paragraph (1). 8 Many issues have been raised because of the enactment of Law No. 22/1999 because it was a guiding law and, therefore, more detailed regulations were required to regulate its implementation. 9 HAYATI, supra note 1 p.255. This paper uses a doctrinal legal method, which aims to "…clarify the law on any particular topic by a distinctive mode of analysis to authoritative texts that consist of primary and secondary source." One of its assumptions is that "the character of legal scholarship is derived from law itself." 10 This paper clarifies the regulatory changes that have an impact on legal certainty for foreign investors in the coal-mining industry.

II. ANALYSIS
Under Law No. 11 of 1967 concerning the Basic Provisions of Mining, the central government was given authority over and control of strategic and vital extractive materials such as coal, while regional governments had authority over and control of non-strategic and non-vital mineral extractive materials. 11 The mining authorizations (kuasa pertambangan, KP) were divided into KPs for general surveys, KPs for exploration, and KPs for exploitation. These KPs could only be granted to government institutions such as state-owned enterprises and region-owned enterprises or private legal entities established under the law of Indonesia, with domiciles in Indonesia, and with the objective to undertake business in the field of mining, managed by Indonesian citizens residing in Indonesia. 12 The central government held all the KPs for all the mining areas in Indonesia; therefore, the central government had the sole power over mining activities.
The central government could appoint a contractor when the mining activities could not be carried out by any Indonesian participant. An agreement between the contractor and the central government could be entered into, provided the central government consulted with the House of People's Representatives (Dewan Perwakilan Rakyat, DPR) beforehand. 13 Under Article 8 paragraph (1) of Law No. 1 of 1967 concerning Foreign Investment, as amended by Law No. 11 of 1970, foreign investment in mining should be founded on cooperation with the government on the basis of a work contract (kontrak karya) or other form in accordance with the applicable laws and regulations. As regulated in Ministerial Decree No. 1641 of 2004 concerning the Guidelines for Processing Applications of Work Contracts and Coal Cooperation Agreements in the Framework of Foreign Investment, the other form was a Coal Cooperation Agreement (Perjanjian Karya Pengusahaan Pertambangan Batubara; PKP2B). Article 1 of this Decree stipulated that work contracts should be employed when the mining activities were not for coal, oil, gas, geothermal, or radioactive resources; this means that agreements with foreign investors concerning coal mining should be in the form of a PKP2B.
When Law No. 22 of 1999 concerning Regional Governance was issued, the authority over the mines shifted to the regional governments. In adjusting the provisions of Law No. 22 of 1999, Government Regulation No. 75 of 2001 concerning the Second Amendment on Government Regulation No. 32 of 1969 concerning the Implementation of Law No. 11 of 1967 concerning the Basic Provisions of Mining was issued; this stated that regents, mayors, governors, and ministers granted KPs in accordance with their respective authorities as follows: 14 a) a regent or mayor, provided the location of the mining area was within the territory of regency or municipality; b) a governor, provided the location of the mining area was across the territory of several regencies or municipalities; or c) the minister, provided the location of the mining area was across the territory of several provinces and/or in a sea territory beyond twelve nautical miles.

A. Legal Framework of Foreign Investment in Coal Mining
On April 26, 2007, Law No. 25 of 2007 concerning Investment was enacted, under which a foreign investor is defined as a foreign individual, legal entity, and/or foreign government that carries out investment in Indonesia. 15 This investment may consist either entirely of foreign capital or as a joint venture with a domestic investor. 16 Nevertheless, according to Law No. 25 of 2007, an investment in Indonesia is classified as a domestic investment when the activity is conducted by domestic investors using domestic capital; 17 therefore, investment activity cannot be classified as a domestic investment if not all of the investors are domestic investors or if foreign capital is being used. Even if only one of the investors in a group of many is foreign or even if only a small proportion of foreign capital is used, according to this law, the investment must be classified as foreign.
The provisions regarding the scope of foreign investment and domestic investment were different from those under the previous regulations. Under Article 3 paragraph (1) of Law No. 6 of 1968 concerning Domestic Investment, an investment was considered domestic when a minimum of 75% of the shares were owned by domestic investors; investments that did not fulfill this requirement were considered foreign investments. 18 According to Article 2 of Law No. 25 of 2007, the provisions of this law apply to investments in all sectors in the territory of the Republic of Indonesia, but this means direct investment only, and does not include indirect investment and portfolios.
Foreign investment is obliged to be in the form of a limited liability company pursuant to Indonesian law (perseroan terbatas (PT)), and such a company must be domiciled in the territory of the Republic of Indonesia, unless stipulated otherwise by a law. 19 Investments via limited liability companies are carried out in the following way: 20 a) Subscribing shares when the company is established, b) Acquiring shares, and c) Other methods pursuant to the prevailing regulations.
Thus, foreign foreign investors are shareholders of the PT according to Article 5 of Law No. 25 of 2007. Nevertheles, it should be based on direct share purchase only. Investors purchasing shares indirectly or through the capital market are not classified as foreign investors.
When investing via a limited liability company, the investors shall not make any agreement and/or statement declaring that shareholding in the limited liability company is for the benefit and on behalf of another person. 21 Even if such an agreement is made, it is null and void. 22 On January 12, 2009, Law No. 4 of 2009 concerning Mineral and Coal Mining was enacted and created a system of IUPs to replace the system of KPs. In spite of the creation of a new system, any existing PKP2Bs were still enforceable and valid until their termination date. 23 IUPs consist of an exploration IUP (IUP Eksplorasi), which includes the activities of general surveys, explorations, and feasibility studies, and a production operation IUP (IUP Operasi Produksi), which includes the activities of construction, mines, processing and refining, and transportation and sales. 24 An IUP may be granted to a business entity (badan usaha), a cooperative (koperasi), or a sole proprietorship (perseorangan), 25 and IUPs are granted by Regents/Mayors/Governors/Ministers, in accordance with their respective authorities, as detailed above. 26 Under Article 93 paragraph (1) of Law No. 4 of 2009 concerning Mineral and Coal Mining, a holder of an IUP and IUPK may not transfer these permits to other parties. According to paragraph (2) of Article 93, the transfer of ownership and/or shares in an Indonesian exchange can only occur after reaching a certain stage of exploration, and only so long as it does not contravene the regulations. Prior to transfer of shares or ownership, the relevant minister, governor, regent, or mayor must be notified. 27 If such changes alter the company status from domestic to foreign investment, approval must be obtained from Badan Koordinasi Penanaman Modal (Capital Investment Coordinating Board, BKPM) of the Republic of Indonesia, along with the legalization of the Articles of Association from the Minister of Law and Human Rights. Within one month of the date of the legalization of the Articles of Association, the holder of the IUP must submit a copy of the agreement and legalization to the Minister of Energy and Mineral Resources through the Director General to ensure the processing of the status change for the IUP or IUPK. 28

B. Overlapping Licenses and Permits in Coal Mining Investment and CnC Status
Consideration letter A of Law No. 4 of 2009 states that mineral and coal contained within the Indonesian mining jurisdiction are non-renewable natural resources that have an important role in fulfilling the needs of people at large. Therefore, the administration of these natural resources must be controlled by the State to provide added value to the national economy to promote the general prosperity and welfare by exercising the principles of justice. In spite of this clear regulation, overlapping coal-mining licenses or permits are a common and widely known problem in Indonesia. This has been a problem since the regents were responsible for issuing the previous mining licenses, the KPs; often, the regents failed to follow correct procedures to avoid overlapping licenses, and their lack of experience in administering mining licenses and compliance issues led to significant criticism from the public and the press. 29 In 2006 29 The president of a production company with less than US$50M in revenue said, "In Indonesia, disputes between local and federal government have in several cases given two different companies access to the same ground." The president of an exploration company observed that "Indonesia stands out in my experience as a country that has lost its way in the management of its natural resources. They are being exploited but in many cases in a way that is dependent on graft rather than a legislative framework. "  Since 2010, these overlaps have become a matter of national importance. The Director General of Mineral and Coal of the Ministry of Energy and Mineral Resources explained that these issues had been discussed in a forum held between the Director General of Mineral and Coal of the Ministry of Energy and Mineral Resources and Commission VII of the House of Representatives. According to the Director General, because many mining areas are located in conservation land, are generally forested areas, these overlaps are inevitable. 35 Therefore, before investing in coal mining, potential investors should consider whether the mining area is in a forested area; if it is, the potential investors have to confirm with both the Ministry of Environment and Forestry and the local Regency Forestry office that an IUP can be obtained and used for the proposed mining project. This is dependent on the nature of the forested land in question. According to Article 6 of Law No. 41 of 1999 concerning Forestry, in Indonesia, forests have three functions: a. Production (hutan produksi): A production forest is forested area the main function of which is to produce forest products such as timber (Article 1[7]); b. Protection (hutan lindung): A protected forest is a forested area set aside as an environmental support system to promote good water management, prevent floods, control erosion, prevent sea water intrusion, and maintain land fertility (Article 1 [8]); and c. Conservation (hutan konservasi): A conservation forest has natural certain characteristics and its main function is to preserve the diversity of its entire ecosystem (Article 1 [9]).
An investor cannot open a mining area and conduct any exploration activities if the proposed mining area overlaps with any area of a protected or conservation forest. According to Article 38 (1) Law No. 41 of 1999 concerning Forestry, the use of forest areas for development purposes outside of forestry activities may only be carried out within production and protected forest areas. Conservation forests are wholly protected from any form of development.
Under Article 38 (3) of Law No. 41 of 1999 concerning Forestry, the use of forest area for mining shall be conducted through the granting of a borrow-to-use forestry permit from the Minister of Environment and Forestry, taking into account the broad constraints mentioned above, as well as the period of time and environmental sustainability. Exploration mining activity in any production forest may be carried out when the investor holds such a borrow-to-use forestry permit. Therefore, potential investors must conduct research at the Ministry of Environment and Forestry and local Regency office as to whether the coal mining area is within conservation, protected, or production forest.
Often, infrastructure projects are necessary for coal mining. To carry out construction, several permits are required, including location and environmental permits. Prior to construction, the investor has to apply for a borrow-to-use forestry permit from the Ministry of Forestry before carrying out any construction or development in overlapping forested areas. Before submitting the application for this 35 http://esdm.go.id/index.php/post/view/land-overlapping-unavoidable as accessed on March 8, 2018, at 6.55 pm of Western Indonesian Time. Until this year, overlappingis still happening. See "Aturan Tumpang Tindih, Nasib 8 Perusahaan Batu Bara belum Jelas" [Overlapping Rules, The Fate of permit, it is essential that the applicant ascertain that "the intended forest area for utilization and the compensation area are clean and clear," since many forest areas are not. 36 This may be complicated by lack of clarity about territorial boundaries. For example, in April 2011, it was reported in a local Banjarmasin newspaper that the province of South Kalimantan and the province of Central Kalimantan had a boundary conflict. Although the boundary of the two provinces had been stipulated by the Minister of Home Affairs, this stipulation had not been disseminated with any coordinates, leaving some uncertainty. 37 To resolve such uncertainties for mining projects, in May 2011 the Ministry of Energy and Mineral Resources started to reconcile all IUPs issued by regional governments. The Government carried out the first national IUP data reconciliation at 3-6 May 2011 in Jakarta to coordinate, verify, and synchronize all IUPs in Indonesia. Representatives from each region submitted data concerning IUP grants along with the attached requirements. The central government requested input from all governors, regents, and mayors, of whom 279 attended the national reconciliation.
Based on this reconciliation, there were 3971 CnC IUPs and 4504 that were not CnC. 38 This reconciliation was the first time the term CnC was introduced. In the Press Release of the Ministry of Energy and Mineral Resources No. 33/Humas KESDM/2011 dated 27 May 2011, the term CnC was announced publicly but was not explained. Thereafter, the Ministry of Energy and Mineral Resources began a communications campaign to clarify the mechanism of compiling and assessing CnC status. 39 On June 30, 2011, the first list of CnCs was issued by the Ministry of Energy and Mineral Resources on its website, along with an announcement of the criteria and process. 40 The announcement stated that a license could be included in the CnC list provided it was issued before 1 May 2010 and did not overlap with another license. In addition, the ministry stated that if the holder of an IUP would like its IUP to be listed 36  in the CnC list, the IUP holder must submit the petition to the issuer of the IUP, copying the Director General of Minerals and Coal.
In addition to this reconciliation process that provided greater legal clarity for coal-mining investors, the Government of Indonesia tried to ensure that IUPs fulfilled all administrative requirements and did not overlap with other licenses. The evaluation was conducted by the General Director of Mineral and Coal of the Ministry of Energy and Mineral Resources or the governor in accordance with their respective authorities. The evaluation procedure was regulated by Government Regulation No. 43 of 2015 concerning the Procedures of the Evaluation on the Issuance of IUP. 41 Under this regulation, the governor or the Minister of Energy and Mineral Resources evaluate existing IUPs to identify whether the IUP could be granted CnC status. 42 The time period for evaluation by the governors was regulated further by Circular Letter No. 01.E/30/DJB/2016 concerning the Implementation of the Evaluation on the Issuance of Mineral and Coal IUP. Under Points 5, 6, 7, and 8 of this letter, the evaluation results must be submitted within ninety working days of document submission. If the evaluation result is not submitted within the required period, the General Director of Mineral and Coal of the Ministry of Energy and Mineral Resources on behalf of the Minister of Energy and Mineral Resources will announce that the status of the IUP in question is not a CnC. 43 IUPs complying with all the administrative requirements and not overlapping with any other permits were declared clean and clear, and this status was announced to the public. Once CnC is verified, it is essential to obtain a CnC certificate. 44 Pursuant activities can still be undertaken by the non-CnC IUP holder, provided there are no objections from any party with an overlapping license.
Originally, the holders of non-CnC IUPs could not sell any coal-mining products abroad, but only in the domestic market. 47  To avoid the overlapping permits because of boundary issues, proper due diligence is necessary and, indeed, it is compulsory for potential investors to check whether the coal mining area is within the appropriate regency or municipality. According to Article 12 paragraph (1)  overlaps, while also considering the principles of advantage, transparency, equality, and both national and regional interest if the IUP overlaps with other license in other fields.
A company that holds an IUP or IUPK can take many alternative legal actions to settle problems of overlap. First, the company can pursue alternative dispute resolution through negotiation or mediation with the other parties that have an IUP or IUPK for the same coal mining area. Second, the company can institute a lawsuit against the regent in the appropriate administrative court.
Supreme Law No. 11 of 1967 concerning the Basic Provisions of Mining regulated that the participation of foreign parties could only be in large-scale mining projects through work contracts of coal work contract, although parties of Indonesian nationals could conduct small-and medium-scale mining projects. 48 Law No. 4 of 2009 concerning Mineral and Coal Mining set out wider possibilities for foreign investment, although it also instituted divestiture requirements to ensure that foreign shareholders in companies holding IUPs divest their shares to the Indonesian Government, regional government, state-owned enterprise, regional government owned enterprise, or national private sector company after five years of production. 49 The government works to protect local investors by limiting ownership by foreign investors. 50 Foreign companies investing in Indonesia are therefore required to divest their shares. 51 According to Article 1 number 8 of Government Regulation No. 23 of 2010 concerning the Implementation of Mineral and Coal Mining Business Activities, as amended by Government Regulation No. 77 of 2014, the divestment shall be the number of foreign shares that is subject to be offered for sale to Indonesian participants. Article 97 (1) of Government Regulation No. 23 of 2010 regulates that the foreign capital of IUP and IUPK holders must be divested; therefore, at least 20% of shares are owned by Indonesian participants after five years of production. beginning after five years of production, such that in the tenth year at least 51% of its shares are owned by Indonesian participants. The provision on share divestment was amended by Government Regulation No.1 of 2017 concerning the Fourth Amendment of Government Regulation No. 23 of 2010. 52 Article 97 (1) states that holders of production and operation IUPs and IUPKs in the framework of foreign investment shall divest their shares gradually after five years of production, and that in the tenth year at least 51% of its shares are owned by Indonesian participants. Under Article 97 (2) of Government Regulation No.1 of 2017, the share divestment by foreign investors shall be at least as follows: a. the sixth year shall be 20%; b. the seventh year shall be 30%; c. the eight year shall be 37%; d. the ninth year shall be 44%; and e. the tenth year shall be 51%.
Share divestment shall be carried out by foreign investors to Indonesian participants in the following order: 53 a. the central government through the minister; b. the provincial governments and the regency or municipality governments where the mining area located; c. state-owned enterprises and regional government-owned enterprises; and d. national private sector companies.
The foreign investor may not choose the Indonesian participant who receives the divested shares.
The requirement of share divestment is an attempt to provide protection to local investors and safeguard the national economy. 54 However, the share divestment requirement raises the significant legal issue as to whether the share divestment is an indirect expropriation. For several reasons, the Indonesian provision regarding the percentage of share divestment is not an indirect expropriation.
First, it is in accordance with the 1945 Indonesian Constitution, Article 33, which provides the following: 55 (1) the economy shall be arranged in common effort on the basis of the principles of the family system, (2) production sectors that are vital for the state and affect the livelihood of the  March 25, 2008 that the state, through the government, possesses and uses the earth, water, and all the natural resources contained therein, for the greatest benefit of the people. This ensures state control over the field of production because it is important for fulfilling the needs of the people at large. 56 This is not intended solely to provide the state power as such, but, it is following the preamble of the Constitution, "to protect all the people and the land that has been struggled for, and to improve public welfare . . . and to achieve social justice for all the people of Indonesia." 57 The definition of the phrase "to be possessed by the state" in Article 33 of the Indonesia Constitution is higher and broader than the concept of ownership in private law. It ties in with the concept of popular sovereignty, such that the people are the resource owner as well as the holder of supreme power in national life, consistent with the doctrine of government "from the people, by the people and for the people." Within this concept of supreme power is the principle of public ownership by the people collectively. 58 The phrase "possession by the state" should be interpreted to encompass both state possession in a broad sense and also ownership derived from the sovereignty of 56 Constitutional Court Decision No. 25/PUU-VIII/2010, at 91. 57 Mohammad Hatta, one of the founding fathers of Indonesia, interpreted possession by the state as follows: "The purpose contain in the Article 33 of Indonesia Constitution is a mass production that exercised as much as possible by the government with capital loan aided from other countries. If such a strategy is unsuccessful, foreign investors could be given opportunities to invest capital in Indonesia, with requirements set out by the government. . . . It was the fundamental thinking on how to develop the economy according to the Article 33 of the Indonesia Constitution . . . If the nation's strength and capital are insufficient, foreigners who are willing to give capital loans to conduct production may lend us a hand. If foreigners are unwilling to loan their capital, then the opportunity to carry out an investment in our country with certain requirements set by Indonesia Government will be given. the Indonesian people collectively over all natural resources. This gives the state a mandate to fulfil the people's needs through the following mechanisms: 59 a. Carrying out policies (beleid) and conducting administration (bestuursdaad), Administration by the state is conducted by the government, with an authority to grant and revoke the permits (vergunning), licenses (licentie) and concessions (concessie), b. Governing (regelendaad): Governance by the state is conducted through the legislative authority of the House of Representatives together with the government and regulated by the government (executive), c. Management (beheersdaad): Management is conducted through the shareholding mechanism and/or direct involvement in the management of state-owned enterprises or legal entities as the institutional instruments through which the state casu quo the government uses its possession of resources to maintain the people's welfare, and d. Monitoring (toezichthoudensdaad): Monitoring is conducted by the State over the fields of production that are vital and or fulfill the needs of the people at large to maintain the public welfare. Constitutional

III. CONCLUSION
In conclusion, several points are clear. First, overlapping coal mining licenses or permits have been a common and widely known problem in Indonesia. Therefore, conducting a proper due diligence is compulsory for potential foreign investors to carry out foreign investment in coal mining. Second, the government of Indonesia developed the CnC mechanism, which includes CnC status and CnC certification to solve the legal uncertainty of overlapping permits. Third, in judging cases of overlapping coal-mining permits, the Indonesian Courts uphold the principle of first come, first served. Fourth, based on the Indonesian Constitution, government provisions regarding requirements for share divestment by foreign investors is not an indirect expropriation, since it is legally mandated to ensure the welfare of the people of Indonesia and compensated according to fair market value.