The Department of State for the Environment regulates the
control of pollution and works closely in cooperation with the Department of
Trade. The Department of Trade requires all companies to exercise control over
the impact of their activities on the environment. Environmental impact
assessments must be undertaken for all activities, the extent of which depends
on the potential level of damage. Activities are divided into categories in
order to determine the level of environmental assessment that must be
undertaken.
A company which has failed to comply with its environmental
reporting requirements will receive a 30-day warning and, if the company still
fails to submit the required report, the company’s business license may be
revoked. Indonesia maintains a strict liability principle of “polluter pays”,
that is, liability for contamination always remains with the party which caused
it.
The Company Law No. 40 of 2007 (Undang Undang Perseroan
Terbatas) came into effect on 16 August 2007. The new law replaces the
antiquated Limited Liability Companies Law No. 1 of 1995 and provides that all
companies engaged in environmentally sensitive industries must implement a
programme of corporate social responsibility (CSR). While the extent of these
CSR obligations is not yet clear – as the Company Law contemplates that further
regulations will be issued to allow implementation of the CSR obligation, it is
clear there will be sanctions for non-compliance – it is expected that
companies engaged in environmentally sensitive
industries (such as mining) will be required to contribute
to a government-sponsored fund, in order to back their CSR obligation.
Additionally, waste management has become a significant
issue in Indonesia and is subject to increased public scrutiny due to several
recent waste-related incidents in Indonesia. To address this, the government
passed the Waste Management Law No. 18 of 2008 on 9 April 2008 (Waste Law).
The government will be primarily responsible for
administering the Waste Law and achieving the objectives it has set. However,
individuals will also have the ability to enforce obligations under the Waste
Law, including the right to bring a class action against the government and
regional administrations over improper waste management. The government will
have the power to impose fines and custodial sentences on those in
contravention of the Waste Law.