Pius Ginting, Coordinator of the Mining Anti-Mafia Coalition, explained that the Local Government Performance Index measures to what extent local governments are serious about enhancing good management practices in the mining and energy sectors.

One of the indicators that is influential for the score in the index is the number of existing Mining Business Licenses (Izin Usaha Pertambangan/IUP) that do not (yet) have the mandatory clean and clear certificate (CnC). The recently introduced CnC certificate shows that the miner has no outstanding royalty obligations and other tax debts, fulfilled its exploration and environmental commitments, has no property delineation issues and obtained the necessary forestry permits.

While there are a total of 10,331 IUP-holders in Indonesia (per February 2016), only 6,365 of these miners have obtained the CnC certificate. Ginting says that this index should encourage provinces to revoke those IUPs that do not have the CnC status.

Number of Mining Business Licenses (IUP) in Indonesia:

IUPs with
CnC Status
IUP without
CnC Status
Total IUPs
6,365 3,966 10,331

Source: Indonesian Ministry of Energy and Mineral Resources

Tjahjo Kumolo, Indonesian Minister for Home Affairs, added that one of the key troubles in resource-rich provinces are frequent cases of overlapping land and natural resource rights. These situations exists due to weak management of local governments and - most likely - the result of corruption.

As the Local Government Performance Index focuses on the mining and energy sectors, the survey was only conducted in those provinces that have significant natural resources used for power generation. These 12 provinces are Central Sulawesi, Riau Islands, Central Kalimantan, East Kalimantan, Bangka Belitung, Southeast Sulawesi, North Moluccas, South Sumatra, Jambi, West Kalimantan, South Sulawesi, and South Kalimantan.