Indonesia Mining Community Development: The PPM Obligation on an IUP or IUPK

Attach a mine to a district in Indonesia and a second obligation attaches with it. Beyond the royalty and the reclamation bond, every holder of an IUP or an IUPK owes the communities around its licence area a development programme — PPM, *pengembangan dan pemberdayaan masyarakat*.

PPM is not a discretionary donation. It is a statutory duty with a named document, a named approver and a reporting line to the Minister, and the government regulation that governs it was rewritten in September 2025. This explainer sets out what the rule now requires, the two documents a holder must produce, who funds the programme, how it is reported, and what it means for an investor underwriting an Indonesian project.

Where the rule sits

The obligation starts in the mining law, Law No. 4 of 2009 on Mineral and Coal Mining, as last amended by Law No. 2 of 2025 (the fourth amendment). The operating detail lives one level down, in Government Regulation No. 96 of 2021 on the Implementation of Mineral and Coal Mining Business, dated 9 September 2021 (State Gazette 2021 No. 208).

That regulation has been amended twice, and the second amendment is the one that matters here. Government Regulation No. 39 of 2025, dated 11 September 2025 (State Gazette 2025 No. 146), rewrote the PPM chapter: it inserted a new Article 178A between Articles 178 and 179 and replaced Articles 179 and 180. The PPM provisions as they now read are those of PP 39/2025, together with the unchanged Articles 181 and 182.

Below the government regulation sit two ministerial instruments:

A word on status. The ESDM legal database records Permen 25/2018 as amended (by Permen No. 50 of 2018), not revoked, and records no revocation for Kepmen 1824/2018. We found no newer ministerial instrument on PPM. The current binding text, however, is the government regulation, and that is where a holder's enforceable duties are set.

Two documents: the blueprint and the master plan

Under the new Article 178A, the provincial document comes first. The governor must prepare and stipulate the *cetak biru* — the blue print — of PPM, involving the regent or mayor, and must base it on the regional medium-term development plan (*RPJMD*). The blueprint must contain at least five things:

• the provincial and/or regency/city human development index;
• the economic condition of the communities around the mine;
• their socio-cultural and environmental condition;
• the condition of their community institutions; and
• infrastructure around the mine.

The blueprint is a government product, not the holder's. The holder's document is second. Article 179(1) requires every IUP and IUPK holder to prepare a *rencana induk* — a master plan — for the communities around its WIUP or WIUPK, prepared with the governor's blueprint in hand. Under Article 179(2) that master plan becomes the reference for the holder's annual PPM programme, which in turn sits in the RKAB — the annual work plan and budget.

Two details matter for timing and for a foreign holder:

1. The holder cannot wait for the governor. Under Article 179(3), if the governor has not yet stipulated a blueprint, the holder must still prepare its master plan — working instead from the regional medium-term plan, its own social mapping and the results of public consultation.
2. The master plan is a consultative document. Article 179(4) requires it to be consulted with the Minister, the regional government, and the community — which the article defines as local communities and/or indigenous communities.

What the programme must contain

Article 180(1), as replaced by PP 39/2025, requires the annual PPM programme to consist of three components:

• (a) a social and environmental responsibility programme;
• (b) the involvement of local and/or indigenous communities around the WIUP or WIUPK in mining activities; and
• (c) a business-partnership and community-based economic empowerment programme.

The earlier ministerial guideline fills that structure out with a menu. Kepmen 1824/2018 sets out eight programme categories for the master-plan template: education (scholarships, skills and vocational training, teaching staff, school facilities); health (community health, health personnel, health facilities); real income level or employment (trade, plantations, agriculture, livestock, fisheries, entrepreneurship, with priority to local labour according to competence); economic self-reliance (capacity and access for small and medium enterprises); social and culture (places of worship, religious relations, disaster relief, preservation of local culture); participation in the sustainable management of the community's living environment; community institution-building to support PPM self-reliance; and infrastructure that supports PPM.

It also defines *who* the programmes are for. Beneficiaries are grouped into three rings by the impact of the operation — Ring I (the villages directly affected by operations, and the location of the main facilities, with a high frequency of contact with the company), Ring II (the sub-district level, directly affected but with medium contact) and Ring III (the regency level or wider, where the impact is indirect and contact is low). Which ring a community falls into is fixed by the social baseline and the environmental study, not by the holder's preference.

Who pays, and how it is controlled

PPM is funded by the holder. Article 179(5) requires an IUP or IUPK holder to allocate funds for the PPM programme, with a minimum amount set by the Minister — the regulation names the Minister as the source of that number but does not itself state it. Article 180(2) then provides that the allocation is managed directly by the holder.

The ministerial layer adds the control rules:

• The money is an operating cost. Under Article 38(4) of Permen 25/2018, annual PPM financing comes from the holder's operational cost, and under Kepmen 1824/2018 it is the figure carried in the RKAB. It must be managed directly by the holder and — the same guideline states — must not overlap financing from the state budget (APBN) or regional budget (APBD).
• Under-spending is not a saving. The guideline lets an unspent balance at year-end be carried into the following year's programme; Permen 25/2018 Article 38(7) likewise requires a shortfall in realisation to be added in the next year.
• The bill rises with output. Where production capacity increases, Permen 25/2018 Article 38(6) requires the holder to increase its PPM cost.
• Breach is sanctionable. Article 40 of Permen 25/2018 lists breaches of the PPM duties (its Article 38) among the violations that attract administrative sanctions.

Reporting and enforcement

Article 181 requires an IUP or IUPK holder to report the realisation of its PPM programme to the Minister. Article 182 leaves further rules on PPM to a Ministerial Regulation.

Enforcement is not theoretical. Article 185(1), as amended, lists breaches of the PPM articles — including Article 179, Article 180 and Article 181 — among the violations that carry administrative sanctions, which are: a written warning; temporary suspension of part or all of Exploration or Operation-Production; and/or revocation of the IUP, IUPK, IPR, SIPB or IUP for Sales.

PPM performance also enters the state's own scorecard. The regulation makes *community development and empowerment performance* one of the aspects assessed when the Minister evaluates the mining-business performance of a Contract of Work or Coal Contract of Work holder — alongside production, finance, reporting and marketing.

Why it matters for a foreign investor

1. It is a licence condition, not a gift. The obligation attaches to the IUP or IUPK itself, and breach reaches the licence — a suspended production stage or a revoked permit is the downside.

1. You control the spend, but you do not set the floor. The minimum allocation is fixed by the Minister rather than written into the regulation, so the envelope can move with policy. Model PPM as a recurring operating cost with an administratively set floor, not a fixed percentage.

1. It clears through your RKAB. The annual PPM programme must sit inside the RKAB — the same document the Minister approves and the same document your work plan depends on. A weak PPM submission is a risk to the approval, not just to the social licence.

1. The beneficiary set is defined by impact. Because the rings follow the social baseline and the environmental study, what you owe — and how far from the gate it reaches — is decided when those documents are drawn. Get the baseline right and the obligation is bounded; get it wrong and it widens.

1. Foreign ownership is disclosed. The master-plan template in Kepmen 1824/2018 requires the permit number, its issue date and validity, and the PMA/PMDN (foreign/domestic investment) status of the holder — so the state sees the ownership structure in the PPM file itself.

1. You cannot push it onto the state. The guideline bars PPM financing from overlapping the APBN or APBD, and an unspent balance carries forward rather than being banked. The cost is the holder's either way.

Catatan Teramine

*This section is Teramine's editorial assessment, not a statement from any government body and not a recommendation.*

The 2025 amendment did two things worth reading together. First, it gave the governor an explicit statutory duty to produce the PPM blueprint (Article 178A). Before that, the blueprint was a premise of the holder's master plan; now it is a spelled-out obligation on the province, to be built on the regional development plan and covering five defined baseline areas. Second, it reframed what the programme *is*: the old article described a funded community programme, whereas the new Article 180 names three components — social and environmental responsibility, community involvement in mining activity, and community-based economic empowerment. That vocabulary is the language of ESG and of the newer "TJSL" social-responsibility agenda, and it reads as a deliberate move to fold PPM into the same reporting logic investors already apply elsewhere.

There is a timing design here that a holder can use. If the province has not yet issued its blueprint, the regulation does not freeze the holder: Article 179(3) supplies a fallback (regional plan, social mapping, public consultation). That keeps a project moving, but it also means the first holder into a province may effectively define the baseline that later holders inherit. Being early to the social mapping is therefore a commercial position, not just a compliance step.

The open design risk is where the number is set. The regulation fixes the *duty* and the *method* but leaves the *minimum allocation* to a Ministerial determination. That is a moving target a project model cannot pin from the regulation alone, and it is the single figure we would most want before underwriting.

What we could not verify

• The minimum PPM allocation itself — any amount or percentage. Article 179(5) states only that the Minister sets it; we did not find or read the instrument that fixes the current figure, so no number is printed.
• Whether Permen 25/2018 remains fully operative after PP 39/2025. The ESDM legal database records it as amended (by Permen 50/2018), not revoked, and we found no replacement ministerial regulation on PPM — but we did not find an express statement of its continuing effect after the 2025 amendment.
• Whether the Kepmen 1824/2018 guideline has been updated or replaced. The database records no revocation; we did not find a newer PPM guideline.
• Any company, project, production figure, budget or reserve. This article describes a rule; it reports no transaction and names no operating company.
• Penalties in practice — how often the administrative sanctions in Article 185(1) have been applied to a PPM breach. No case data was read.

Sources

Every rule and date below comes from an official text downloaded from the legal information database of the Ministry of Energy and Mineral Resources (JDIH ESDM) and read in full or in the relevant part.

• Government Regulation (PP) No. 96 of 2021 on the Implementation of Mineral and Coal Mining Business, dated 9 September 2021 (State Gazette 2021 No. 208) — read for the PPM chapter (BAB XIX) and its articles on the master plan, the blue print, financing, reporting and the administrative-sanction article, and for the legal chain it names.
• Government Regulation (PP) No. 39 of 2025, the second amendment to PP 96/2021, dated 11 September 2025 (State Gazette 2025 No. 146) — read for the PPM amendments: the insertion of Article 178A (the governor's duty to stipulate the blue print and its five minimum contents), the replacement of Article 179 (the master plan, its fallback when no blue print exists, the consultation parties, and the minimum allocation set by the Minister), and the replacement of Article 180 (the three programme components and direct management of the funding).
• Ministerial Regulation (Permen) No. 25 of 2018 on Mineral and Coal Mining Business, dated 3 May 2018 (State Gazette 2018 No. 595) — read for Article 38 (the PPM duties, financing from operational cost, direct management, the increase on higher production capacity, the carry-over of an unrealised cost, and the delegation of the implementation guideline to the Minister) and for the sanctions in Article 40.
• Ministerial Decree (Kepmen) No. 1824 K/30/MEM/2018 on Guidelines for the Implementation of Community Development and Empowerment, dated 7 May 2018 — read for Annex I (the blue print drafting process, its five-yearly evaluation, and its framework) and Annex II (the master-plan template: the ring system, the programme menu of eight categories, and the financing rules, including the bar on overlap with the APBN and APBD).

For the permit, document and compliance work that sits under this framework — the master plan, the RKAB package and the reporting — see our [permit services](/en/layanan-izin) page. For mining assets currently listed, see the [mining marketplace](/en/marketplace).

The PPM obligation is best read alongside the document that carries its annual programme, the [what the RKAB is](/en/news/what-is-rkab-indonesia) explainer; the statute it ultimately derives from, [Indonesia mining law](/en/news/indonesia-mining-law); the retirement-phase obligation it is distinct from, [mine closure in Indonesia](/en/news/mine-closure-in-indonesia); and the investment context the minister's own messaging places it in, [Indonesia mining investment climate](/en/news/indonesia-mining-investment-climate).