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A Concession Agreement gives private companies the right to operate public assets or natural resources in Indonesia for a set period. Common examples include mining companies extracting minerals, firms managing toll roads, or operators running airports - all under government oversight. These agreements spell out the company's rights, obligations, and payment terms to the state.

Under Indonesian law, particularly the Public Private Partnership regulations, these agreements protect both public interests and business investments. They define key details like operation standards, profit sharing, and what happens when the concession ends. The government keeps ownership while letting private expertise and capital develop these assets efficiently.

Use a Concession Agreement when your company plans to operate government-owned infrastructure or extract natural resources in Indonesia. This agreement becomes essential for projects like toll road operations, airport management, mining operations, or power plant development where significant private investment meets public assets.

The timing matters most when responding to government tenders or planning major infrastructure investments. Getting the agreement in place early helps secure financing, define operational boundaries, and establish clear revenue-sharing mechanisms. Indonesian regulations require these agreements for most public-private partnerships, especially in strategic sectors like transportation, energy, and natural resources.

• Natural Resource Concessions: Used for mining, oil, and gas projects, these agreements focus on extraction rights, environmental safeguards, and royalty payments
• Infrastructure Concessions: Common for toll roads, airports, and seaports, emphasizing operational standards and revenue sharing
• Public Service Concessions: Applied to water supply, waste management, and public transportation, with strong service quality requirements
• Tourism Concessions: Designed for managing tourist destinations or facilities on public land, balancing commercial interests with preservation
• Energy Concessions: Specifically structured for power plants and renewable energy projects, including grid connection and power purchase terms

• Government Agencies: Represent public interests, set concession terms, and monitor compliance through ministries like the Ministry of Public Works or Ministry of Energy
• Private Companies: Operate the concession, invest capital, and manage day-to-day operations while following agreement terms
• Legal Teams: Draft and review Concession Agreements, ensuring compliance with Indonesian regulations and protecting both parties' interests
• Financial Institutions: Provide project financing and often require specific terms in the agreement to secure their investment
• Technical Consultants: Advise on operational standards, environmental compliance, and performance metrics

• Project Scope: Define the asset or resource involved, operational boundaries, and duration of the concession
• Regulatory Compliance: Gather permits, licenses, and approvals required from relevant Indonesian authorities
• Financial Details: Calculate investment commitments, revenue sharing formulas, and performance guarantees
• Technical Standards: Document operational requirements, maintenance schedules, and quality benchmarks
• Risk Assessment: Map out force majeure conditions, termination rights, and dispute resolution procedures
• Stakeholder Input: Collect feedback from technical, legal, and financial teams to ensure comprehensive coverage

• Parties and Authority: Full legal names, registration details, and proof of authority to enter agreement
• Concession Scope: Detailed description of assets, operational rights, and geographical boundaries
• Duration Terms: Clear start date, concession period, and conditions for extension or early termination
• Financial Provisions: Payment structure, revenue sharing, performance bonds, and guarantee arrangements
• Operational Standards: Service levels, maintenance requirements, and quality benchmarks
• Risk Allocation: Force majeure clauses, liability limits, and insurance requirements
• Dispute Resolution: Choice of Indonesian law, arbitration procedures, and governing jurisdiction

A Concession Agreement differs significantly from an Asset Purchase Agreement in several key aspects, though both involve valuable assets and long-term business arrangements in Indonesia.

• Ownership Transfer: Concession Agreements maintain government ownership while granting operational rights; Asset Purchase Agreements transfer full ownership permanently
• Duration: Concession Agreements have a fixed term with possible extensions; Asset Purchase Agreements represent a one-time permanent transfer
• Government Role: In Concessions, the government maintains oversight and can set operational standards; in Asset Purchases, the government exits completely after sale
• Payment Structure: Concessions typically involve ongoing revenue sharing and periodic fees; Asset Purchases require a single payment or structured installments
• Regulatory Framework: Concessions fall under public-private partnership laws; Asset Purchases follow general commercial law and property regulations