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Environment
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.