Constitutional Court Decision 202/PUU-XXIII/2025 is a 2026 ruling of the Constitutional Court of Indonesia on a petition for material review of the provisions of Undang-Undang 2/2025, the fourth amendment to the Mineral and Coal Mining Law (Undang-Undang 4/2009), that allow mining business licence areas (wilayah izin usaha pertambangan, WIUP) to be awarded by priority, without an auction, to state-owned and private enterprises for downstream processing (hilirisasi).^[1][2] The petition was brought by four individual citizens.^[3] It is one of the constitutional review cases on mining and energy regulation decided in July 2026.

The Court rejected the argument that private enterprises should be excluded from priority awards, but held two features of the scheme conditionally unconstitutional. It read the phrase "by priority" (dengan cara prioritas) in Pasal 51B and 60B as permitting a priority award only on clear parameters through an objective, transparent and accountable assessment, and not as direct appointment; and it read the reference to "domestic and/or global" supply chains as requiring domestic supply to be met first.^[4] The decision was pronounced on 16 July 2026, later on the same day as Decision 160/PUU-XXIII/2025, which had placed the same condition on the other priority provisions of the statute and on which the Court drew for consistency.^[5][6]

¶ Background

Undang-Undang 2/2025 provides two routes to a mineral or coal WIUP: auction, the regular route, and award by priority to particular subjects, in particular conditions, for particular purposes. The Court identified three priority instruments in the statute. Pasal 51 ayat (1) and Pasal 60 ayat (1) give priority to cooperatives, small and medium enterprises and enterprises owned by religious mass organisations; Pasal 51A ayat (1) and Pasal 60A ayat (1) give priority to state-owned, regionally owned or private enterprises for the purpose of strengthening universities; and Pasal 51B ayat (1) and Pasal 60B ayat (1) give priority to state-owned and private enterprises for downstream processing, for metal minerals and coal respectively.^[2:1] Under Pasal 51B ayat (2) and Pasal 60B ayat (2), a priority award for downstream processing is to take account of the size of the area, domestic employment, the amount of investment, and "increased added value and the fulfilment of domestic and/or global supply chains".^[7]

The Court placed the scheme in the history of the downstream-processing policy. It recalled that Pasal 102 and 103 of Undang-Undang 4/2009 had required licence holders to process and refine minerals domestically, that its Decision 10/PUU-XII/2014 had upheld that obligation as an expression of state control over natural resources under Pasal 33 ayat (3) of the Constitution, and that Undang-Undang 3/2020 had extended the obligation and the sanctions for exporting raw ore.^[8]

¶ Petition

The petition was registered on 28 October 2025 and revised on 18 November 2025.^[9] It asked the Court to strike out the words "and private enterprises" (dan Badan Usaha swasta) from Pasal 51B ayat (1) and Pasal 60B ayat (1), arguing that priority is an affirmative instrument that should be reserved for groups entitled to special treatment under Pasal 28H ayat (2) of the Constitution, and that its extension to private enterprises was undefined, uncertain and contrary to state control of natural resources. It also asked the Court to strike out "and/or global" from Pasal 51B ayat (2) huruf d and Pasal 60B ayat (2) huruf d, arguing that a global supply-chain criterion would orient downstream investment toward external markets at the expense of domestic interests. The grounds invoked Pasal 28D ayat (1), Pasal 28H ayat (2) and Pasal 33 ayat (3) and (4).^[1:1] The Court heard the House of Representatives on 26 November 2025 and the President on 4 December 2025, together with experts called by the petitioners and the President.^[10]

¶ Ruling

¶ Private enterprises

The Court held that private enterprises are economic actors alongside state-owned and regionally owned enterprises and cooperatives, and that their participation in mining cannot be excluded. Downstream processing is capital-, technology- and risk-intensive and requires integration from upstream to downstream, and the Court reasoned that the policy is tied to the objectives of downstream processing rather than to the ownership of the enterprise. It found that the words "and private enterprises" did not create legal uncertainty or breach Pasal 28D ayat (1), 28H ayat (2) or 33 ayat (3) and (4), and rejected that part of the petition.^[2:2][11]

¶ The meaning of priority

The Court described a priority award as a fast track by which an enterprise may obtain a WIUP without an auction.^[2:3] In Decision 160/PUU-XXIII/2025 it had held the priority phrase in Pasal 51 ayat (1) and Pasal 60 ayat (1), among other provisions, conditionally unconstitutional. Although the petitioners had not challenged the priority phrase in Pasal 51B and 60B, the Court held that, for consistency across the statute, the phrase "by priority" in Pasal 51B ayat (1) and (2) and Pasal 60B ayat (1) and (2) had to carry the same meaning: a priority that may be given only on clear parameters through an objective, transparent and accountable assessment, and that is not to be understood as an act of direct appointment (penunjukan langsung).^{[5:1][7:1][4:1]}

¶ Domestic and global supply chains

On the supply-chain criterion, the Court held that the words "and/or", which under Lampiran II angka 264 of Undang-Undang 12/2011 on law-making may be read either cumulatively or alternatively, left it uncertain whether domestic and global supply were equal or which came first. Relying on state control of natural resources for the greatest prosperity of the people, and on the existing domestic market obligation that requires producers to supply the domestic market before exporting, it held that domestic supply must take precedence. It declared "and/or global" in Pasal 51B ayat (2) huruf d and Pasal 60B ayat (2) huruf d conditionally unconstitutional unless the criterion is read as giving priority to increased added value and domestic supply chains, with global supply chains to be served only once domestic supply chains have been met.^[7:2][4:2]

¶ Operative order

The operative order granted the petition in part, made the three conditional declarations, ordered publication of the decision in the State Gazette (Berita Negara), and rejected the remainder of the petition. The decision was reached in deliberation on 2 July 2026 and pronounced on 16 July 2026 by nine justices, with Suhartoyo presiding.^[4:3]

¶ Related decisions

Decision 160/PUU-XXIII/2025, pronounced earlier on 16 July 2026, attached the same condition to the priority phrases in Pasal 51 ayat (1) and (3) to (6), Pasal 51A, Pasal 60 ayat (1) and (3) to (6), Pasal 60A, Pasal 75 ayat (3), (5) and (7) and Pasal 75A of Undang-Undang 2/2025.^[6:1] Between them, the two decisions attached the requirement of an objective, transparent and accountable assessment to the priority provisions of Pasal 51, 51A, 51B, 60, 60A, 60B, 75 and 75A.^[6:2][4:4] CRPG's regulatory tracker published an account of the decision on 15 August 2026.^[12]

¶ See also

• Constitutional Court Decision 184/PUU-XXIII/2025

¶ External links

• Decision (Mahkamah Konstitusi)
• Case record (Mahkamah Konstitusi)
• CRPG: Priority Grant of Mining Permits to Private Entities: MK 202/PUU-XXIII/2025 (crpg.id, 15 August 2026)

¶ References