Indonesia’s decision to revoke forest and mining permits after the recent landslides in Sumatra reflects growing awareness that environmental disasters are often worsened by human behaviours. Landslides are commonly described as natural disasters, but research shows that they are frequently linked to deforestation and intensive land use, especially in areas with vulnerable terrain.
In Indonesia, mining has been a major contributor to forest loss, and scientific research has proven that reduced forest cover can make slopes more likely to collapse under certain conditions, such as heavy rain. This makes clear that land-use planning and vegetation protection are critical to reducing environmental risks and matter greatly for public safety.
What is significant is not the announcement of permit revocation, but how to implement and what happens next. In principle, withdrawing the permit can allow damaged land to be restored, risk be reduced, and foster alternative land uses. In reality, the outcome depends on how these decisions are carried out. Recent reporting indicates that, rather than halting operations outright, the government has moved toward restructuring ownership and control of certain affected assets, including -for example- the Martabe gold mine. If mining continues under new arrangements, the enforcement actions may be seen as administrative work rather than a substantive shift in land-use strategy or risk management.
State ownership and environmental enforcement: a delicate balance
The transfer of the Martabe gold mine to a newly established state-owned entity operating under the sovereign investment entity Danantara, illustrates this broader policy tension. Greater state involvement in strategic assets is often justified as a means to enhance coordination, oversight, and alignment with national development objectives. At the same time, such transitions inevitably invite scrutiny of their consistency with existing legal frameworks, administrative processes, and procedural safeguards. When environmental enforcement coincides with changes in ownership or control, clarity over legal authority and process becomes essential to ensure that policy intentions are seen as strengthening, rather than complicating, environmental and social governance.
Supporters of the transfer may reasonably point to economic and operational realities. Large-scale mining projects are capital-intensive, support regional employment, and contribute to public revenue. Abrupt changes in operations could carry social and fiscal costs, while continuity may help preserve stability during institutional transitions. From this perspective, maintaining operations under revised governance arrangements can be viewed as a pragmatic response to competing policy objectives rather than a retreat from environmental priorities.
Legal and financial constraints further narrow the range of policy options. Mining projects typically involve long-term contracts, regulatory assurances, and investment protections. Even when governments act within their authority, changes that materially affect control, operational conditions, or economic expectations can introduce legal uncertainty or trigger disputes. Such risks help explain why post-disaster responses often emphasise restructuring and reassignment over disruptive interventions.
At the same time, continuity carries its own challenges. If land-use intensity, environmental practices, and accountability mechanisms remain unchanged, the factors contributing to environmental vulnerability may persist. For external stakeholders, including communities and investors, transparency around environmental standards, monitoring arrangements, and rehabilitation commitments becomes particularly important when the state assumes both regulatory and operational roles.
Outcomes matter more than ownership
Ultimately, the credibility of Indonesia’s recent actions will be judged by the tangible outcomes. Permit revocation and asset transfers can strengthen governance, but only if they lead to demonstrable improvements in land-use practices, risk management, and environmental performance, and if they are implemented with clear legal grounding and procedural consistency. The shift toward state-led restructuring, rather than immediate operational cessation, makes these outcome-based indicators even more important. For policymakers and markets alike, the key question is whether these measures reduce environmental and operational risk over time, or merely repackage existing vulnerabilities under new administrative arrangements.
For the financial sector, these developments matter increasingly. Physical risk, natural capital depletion, and climate change are no longer abstract concerns. Intensifying rainfall and weather variability are amplifying the consequences of land degradation, increasing exposure to floods, landslides, and operational disruption. Where natural capital has been eroded, these climate-related risks are more likely to materialise on balance sheets through asset damage, business interruption, insurance losses, and regulatory instability. Clear signals on land-use governance, legal certainty, and environmental accountability are therefore becoming central to capital allocation decisions.
A more effective policy pathway would focus on reducing risk before it accumulates, while aligning financing and industrial policy with the realities of a nature-dependent economy. This entails factoring climate conditions, landscape vulnerability, and ecosystem limits into land-use, permitting, and financing decisions, and using public finance and state ownership to steer activity away from higher-risk areas. Stronger oversight and clearer risk disclosure would not only bolster environmental governance but also reinforce long-term economic resilience and financial stability.
The article was first published in The Jakarta Post.