Minister of MSMEs Regulation Number 4 of 2026 Simplifies the Verification of Priority Mining Business License Areas and Strengthens Corporate Business Responsibility Obligations

Introduction

On 8 July 2026, the Ministry of Micro, Small, and Medium Enterprises enacted Minister of Micro, Small, and Medium Enterprises Regulation Number 4 of 2026 on Amendments to Minister of Micro, Small, and Medium Enterprises Regulation Number 4 of 2025 concerning the Verification of Small and Medium Enterprises Applying for Metal Mineral and Coal Mining Business License Areas through the Priority Allocation Mechanism (“MSME Regulation 4/2026”).

The priority allocation mechanism for applications for Mining Business License Areas (WIUP/WIUPK) is a constitutional affirmative policy mechanism based on the State’s Right to Control (Hak Menguasai Negara – “HMN”), which aims to achieve distributive justice and equitable economic development so that the nation’s natural resources are not controlled solely by large-capital business groups. This special mechanism is allocated to certain groups, such as Small and Medium Enterprises (SMEs), sole proprietorships, cooperatives, and business entities owned by religious community organizations. Although it provides preferential access, this mechanism does not constitute a direct appointment, as applicants are still required to undergo a transparent selection and verification process through the OSS System, satisfy technical, financial, and environmental eligibility standards, and implement community empowerment commitments, such as the Micro and Small Enterprise Economic Development Work Program (Corporate Business Responsibility), within their operational areas.

The Ministry of MSMEs considers it necessary to refine the previously applicable verification procedures to align them with the provisions of Government Regulation Number 39 of 2025. Government Regulation Number 39 of 2025 mandates the Ministry of MSMEs to act as the sole authority responsible for screening, examining, and ensuring that business entities claiming priority rights to mining business license areas genuinely satisfy the qualifications as legally recognized MSMEs before being processed further by the Ministry of Energy and Mineral Resources.

These adjustments are intended to strengthen legal certainty, optimize the implementation of verification through an integrated digital system, and ensure the commitment of MSMEs to promoting economic empowerment for communities surrounding mining business license areas.

MSME Regulation 4/2026 amends the guidelines governing the implementation of administrative criteria verification for small and medium enterprises applying for Metal Mineral Mining Business License Areas (WIUP) or Coal Mining Business License Areas (WIUP) through the priority allocation mechanism. MSME Regulation 4/2026 introduces several substantive changes compared with the previous regulation, Minister of Micro, Small, and Medium Enterprises Regulation Number 4 of 2025 on the Verification of Small and Medium Enterprises Applying for Metal Mineral and Coal Mining Business License Areas through the Priority Allocation Mechanism (“MSME Regulation 4/2025”), in order to simplify the administrative verification process.

The first amendment changes the document verification mechanism into an examination of data contained in the legal administration system, taxation system, and MSME database, replacing the previous requirement to submit 14 (fourteen) categories of physical documents. The second amendment removes the administrative criterion requiring applicant MSMEs to have been in operation for at least 1 (one) year. The third amendment reduces the opportunity for business entities to rectify their documents to only 1 (one) correction (previously up to 2 (two) opportunities were permitted). The fourth amendment simplifies the bureaucratic process by eliminating the issuance of a “Verification Approval Letter” by the Minister and replacing it with direct approval by the Deputy through the OSS System. The fifth amendment strengthens the Corporate Business Responsibility (“CBR”) obligation, which must now be implemented both before and after production commences (instead of no later than 3 (three) years after the Mining Business License is obtained), must be reported periodically 2 (two) times per year (previously once per year), and is supervised through direct field inspections (previously only through monitoring).

Comparison

The following table compares MSME Regulation 4/2026 and MSME Regulation 4/2025:

Key Provisions

Integrated Verification

Pursuant to the amendment to Article 5, the Minister delegates the implementation of the Administrative Criteria Verification to the Deputy, who serves as the Chair of the Verification Team.

The verification process is conducted in an integrated manner through the legal administration and taxation systems, the OSS System, and the MSME database information system.

The verification focuses on the consistency of the data recorded in the system and the fulfillment of the documentary requirement in the form of a statement letter declaring the applicant's commitment to implement the Corporate Business Responsibility ("CBR") Program.

Obligation to Implement the Corporate Business Responsibility (CBR) Program

MSME Regulation 4/2026 introduces Chapter IVA and Article 9A, which regulate the obligation of business entities to implement the Corporate Business Responsibility (CBR) Program for local MSMEs in the regency/municipality where the mining business license area is located.

The CBR Program must be implemented from the stage prior to the commencement of production activities through partnerships within the supply chain and must continue after production activities have commenced through partnership schemes and community economic development programs.

Nevertheless, MSME Regulation 4/2026 does not regulate in greater detail the forms, mechanisms, or procedures for implementing such partnership schemes. Accordingly, further clarification remains necessary.

In addition, all costs incurred in implementing the CBR Program must be budgeted for and included in the company's annual Work Plan and Budget (Rencana Kerja dan Anggaran Biaya – "RKAB").

Field Supervision and Reporting

Article 12 provides that the Government shall conduct field inspections to verify the conformity between the administrative documents and the actual implementation of the CBR Program.

Furthermore, Article 15 requires business entities to submit reports on the implementation of the CBR Program to the Minister and to the governor or the regent/mayor, in accordance with their respective authorities, at least 2 (two) times within 1 (one) year.

Closing

MSME Regulation 4/2026 governs the priority allocation of Mining Business License Areas (WIUP) to small and medium enterprises by simplifying the administrative verification mechanism while enhancing the accountability of business entities in implementing the CBR Program.

These amendments are intended to accelerate administrative processes through the optimization of the OSS System while reinforcing the Government's policy objective of ensuring that the utilization of mineral and coal resources generates added value for the development of MSMEs and the economic welfare of communities surrounding mining areas.

Accordingly, business entities applying for WIUP through the priority allocation mechanism should ensure the readiness of their administrative data integrated within the relevant systems, fulfill all verification requirements, and prepare and implement the CBR Program on a continuous basis in accordance with each stage of their business activities. Given that supervision is now conducted through field inspections, accompanied by more frequent reporting obligations and the possibility of a recommendation for the revocation of a Priority Mining Business License in the event of repeated violations, compliance with the provisions of MSME Regulation 4/2026 constitutes an important factor in maintaining the continuity of mining area management rights while supporting the achievement of the objectives of equitable economic development and MSME empowerment as contemplated under the prevailing laws and regulations.