For months, PT Bayan Resources Tbk (BYAN), the coal miner controlled by billionaire Low Tuck Kwong, could not get the Ministry of Energy and Mineral Resources (ESDM) to approve its revised annual production plan (‘RKAB’) that sets the company’s production quota. With no quota, Bayan had to stop producing and declared force majeure on its overseas delivery contracts.
While conglomerates like BUMI and Adaro may be larger, Bayan’s coal sits closer to the surface, resulting in the lowest overburden removal costs in the industry and exceptionally high profit margins. This makes it highly vulnerable to regulatory holdups and attractive to opportunistic buyers.
Bayan’s controlling shareholders then signed a conditional agreement to sell a large stake to PT Jhonlin Baratama, an entity linked to Andi Samsudin Arsyad, a politically connected businessman, also known as Haji Isam. The reported price was well below market. Within days, ESDM gave Bayan’s subsidiaries up to 20 million tons of additional quota, and the company withdrew its force majeure notice and resumed operations. Notably, the newly minted state investment agency, Danantara, did not absorb this lucrative stake for the public benefit. Instead, it was secured by Haji Isam, who is a principal campaign financier for President Prabowo Subianto—leaving market observers to draw their own conclusions about the ordeal’s true purpose.
An ESDM official told the press that the timing was coincidental and the result of routine administrative processing. But that’s not how the market reads it. As far as they could tell, the quota came through because of political alignment; technical compliance had little to do with it.
South China Morning Post (SCMP) reported that the Bayan case left an “unpalatable aftertaste” for investors, leaving market participants worrying about uncertainty over regulatory decisions and future government interventions.
This isn’t the first state takeover case
Bayan is not the first company to face this issue. A pattern emerges across the archipelago in which the state uses its regulatory power to push operators into distress and then toward targeted asset transfers or state absorption.
The Martabe Gold Mine in South Tapanuli, North Sumatra, is one of the country’s best gold assets. PT Agincourt Resources, a subsidiary of Astra International’s United Tractors, operates it. After severe floods in Sumatra late last year, the government’s Forest Area Regulation Task Force (‘Satgas PKH’) put Agincourt on a list of concessionaires facing immediate permit revocation over alleged environmental compliance failures.
Experts raised concerns about the Satgas PKH’s revocation list, saying the task force can only audit and recommend, but it doesn’t have the authority to revoke a mining company’s permit. Officials with legal authority must make the revocation decision. Meanwhile, Danantara’s Chief Operating Officer, Dony Oskaria, said the Martabe’s mining rights would be given to a newly established state-owned mineral company under Danantara, PT Perminas.
However, due to strong pushback from international investors, the government paused Martabe’s revocation, and the asset now sits under administrative “reassessment.” But while the government paused the revocation of the Martabe mine due to swift pushback from international investors, domestic tycoons have faced the full brunt of the policy. In January, the government abruptly revoked the permits of 28 companies across Sumatra, spanning over one million hectares.
Smaller operators run into their own versions of this. In South Sumatra’s coal corridors and Central Kalimantan’s mineral belts, independent operators have faced sudden holds on haul-road permits, port access, and forest clearing approvals. A recurring pattern emerges where independent operators face sudden, indefinite holds on their approvals, leaving them little choice but to sell equity to well-connected national or regional figures.
The government must be more transparent
This is not to say that large conglomerates or foreign-owned operators deserve protection. Big companies — owned by domestic tycoons or multinational parents — must comply with the law like anyone else. A company that breaks environmental standards, misses its local processing obligations, or avoids taxes should face firm enforcement.
But that enforcement has to come through due process, with transparent legal proceedings and equal treatment under the law. Enforcing a statute is one thing. Holding up permits until an asset lands with a favored buyer is another. If officials can decide on their own who may hold an asset and who must sell, the regulator stops acting as a referee and starts deciding who gets access to the sector.
If the state really wants to reclaim badly managed concessions or earn more from its natural resources, it has to replace this discretionary model with a transparent one.
Why not put all concessions up for auction
An asset should be returned to the public domain when its concession holder loses its operating rights due to a legal or environmental breach. It should go to an open tender and not be reassigned through an opaque administrative process or closed-door negotiation. Bidders at a public auction would compete on clear criteria, such as higher royalties for the treasury, binding guarantees for environmental remediation, and verified technical capability.
Making concession management public would break the rent-seeking cycle, because permits given behind closed doors create a trade that suits both sides. Politicians use regulatory bottlenecks to raise campaign money or win commercial stakes for allies, and companies focus on buying political patronage instead of running their operations better or improving their environmental record.
But it’s the public who pays for this in the long run. When approvals depend on patronage, country risk rises, and foreign investment falls. That raises the cost of capital across the economy. It pushes serious investors — the ones who bring technology, ESG compliance, and long-term capital — elsewhere, leaving the market to short-term rent-seekers.
Restoring institutional credibility means taking arbitrary leverage away from executive agencies and running the extractive sector on open, rule-based governance.
Want to share your views on public policy reforms or other political issues?