PWYP Indonesia together with the Secretariat of Extractive Industry Transparency Initiative (EITI) Indonesia under Coordinating Ministry of Economics held focus group discussion entitled “Accelerating the Implementation of Beneficial Ownership Disclosure in Indonesia”, last (14/5), to further push the on-going implementation of beneficial ownership (BO) policy in Indonesia.

The discussion served as a platform for the participants to share their efforts in implementing the policy as well as the barriers which might hinder the progress. The participants are expected to be able to identify the follow-up actions to address the tangled issues. Attending this discussion was representatives from the Corruption Eradication Commission (KPK), Ministry of Law and Human Rights, Financial Transaction Analysis and Transaction Center, Ministry of Energy and Mineral Resources (MEMR), National Development Planning Agency, EITI Indonesia Secretariat, National Corruption Prevention Strategy Team (Stranas-PK), Indonesia Petroleum Association (IPA), Indonesia Mining Association (IMA), and civil society organizations.

In his opening, Slamet Sudarsono, the Deputy of Politics, Law, Defense, and Security of the National Development Planning Agency, conveyed the position of BO disclosure within the development policy. Currently, BO Disclosure in Indonesia has been included in the technocratic design of the National Medium-Term Development Plan (RPJMN) 2020-2024, particularly in the law and regulation sector. He also added that BO disclosure was a manifestation of the strategic goal of the anti-corruption formation. BO policy has also become the national priority in the 2019 government work plan, and included in the Open Government Partnership (OGP) and Stranas-PK Action Plan.

Muhammad Isro, the representative of the Stranas-PK team, explained that BO disclosure policy was included in the 2019-2020 Stranas-PK action program, namely in the action of Licensing and Commerce, specifically the sub-action for Improving Data Governance and Compliance in Extractive, Finance, and Plantation sectors.

“BO dimensions that are included in the Stranas-PK are data strengthening and utilisation. In the first quarter of 2019, the homework for the Ministry of Law and Human Rights and the Ministry of Cooperatives and SMEs is to formulate the regulation on the Procedures for Implementation of Principles Regarding Beneficial Owners of Corporations, regulation on Cooperative Registration, and Cooperative Data Integration in the Online Public Legal administration (AHU) system,” explained Isro. However, the draft of the regulation still being harmonized, while the data integration has yet to be implemented because the system itself is not ready.

Apart from the targets that have not been achieved, the Ministry of Law and Human Rights has carried out several initiatives after the issuance of Presidential Regulation (Perpres) no 13/2018, as it was conveyed by Daulat Silitonga, the Civil Director of the Directorate General (Ditjen) of the Ministry of Law and Human Rights. That is, the issuance of Ministry of Law and Human Rights regulation no 17/2018 as the derivative rule of government regulation no 24/2018 also an adjustment to the registration system of limited liability companies, foundations, and associations by adding a BO data entry form that must be carried out by the corporation through a notary. Also, the Ministry of Law and Human Rights is preparing a system of direct BO information reporting by corporations, after the draft decree was passed.

Fithriadi Muslim, Director of Law at Financial Transaction Analysis and Transaction Center, emphasised that in terms of financial transactions, BO transparency is essential to identify the money laundering crimes. BO data disclosure becomes a customer due diligence instrument to see whether a transaction is suspicious or not. However, corporate disclosure of BO data is still self-reporting, so it is necessary to ascertain the corporate compliance and data verification.

Sony Heru Prasetyo, Head of Sub-Section for Drafting Legislation, Directorate General of Mineral and Coal, MEMR, underlined that far before the issuance of Presidential Regulation no 13/2018, MEMR has implemented BO disclosure policy. BO information has become part of the licensing requirements for the company. However, in its implementation, the MEMR has not been able to verify BO data that has been disclosed. Cooperation with the authorised ministries/agencies is needed. On the other hand, BO disclosure in mining license has an impact on the length of time required to arrange permits. According to Sony, many companies, especially those included in the category of Foreign Investment (PMA), are constrained in obtaining their BO information.

While in the oil and gas sub-sector, SKK Migas representatives acknowledged that BO policies are not developing yet. Evaluation regarding BO is just carried out at the auction evaluation stage and in the interest transfer phase. BO publications have yet to be carried out because the legal umbrella is deemed insufficient.

Edi Effendi Tedjakusuma, Chair of EITI Indonesia Secretariat explained that within the framework of the EITI, Indonesia was quite progressive in carrying out the BO disclosure initiative. EITI Indonesia has encouraged EITI reporting companies to disclose their BO in the 2016 EITI report, which was published in 2018.

Of the 80 reporting companies in the mineral and coal sub-sector, 62 of them submitted BO information. While in the oil and gas sub-sector, out of 70 EITI reporting companies, only 43 companies have disclosed their BO data. However, there is no verification of the submitted BO information. Data accuracy is still a challenge in carrying out BO policies.

Each ministry and institution considered has shown gradual progress in implementing BO disclosure policy in Indonesia. But according to Prahesti Pandanwangi, Director of Law and Regulation, National Development Planning Agency, it is necessary to synchronise and prioritise the agenda of BO disclosure in the future.

Daulat Silitonga said that Ministry of Law and Human Rights will move forward with the formulation of the Memorandum of Understanding with the ministries/agencies on the BO data utilization and also drafting of the regulation on BO data access.

While the Ministry of Energy and Mineral Resources will make changes to Government Regulation no 23/2010 which will include BO information among the requirements of licensing in the mineral and coal sector. It aims to increase the level of the legal umbrella, which was previously regulated under a ministerial regulation. Besides, MEMR will also draft ministerial decree concerning the obligation to include the tax ID number and BO list in submitting licensing / reporting application in the MEMR sector.

EITI Indonesia Secretariat itself will facilitate the meeting between the Indonesia Petroleum Association (IPA) with Ministries/Agencies to discuss BO reporting for foreign oil and gas companies who’s categorized as Permanent Business Entities. Up until today, there is no government agency which has the authority to collect BO of foreign companies.

The main challenge encountered regarding BO disclosure in Indonesia related to the data access. Although Presidential Regulation no 13/2018 mentioned that the regulation of public access to BO information refers to the Law on Public Information Disclosure Act. There is still a reluctance and debate whether to disclose the data. Therefore, it’s needed to develop further discourse regarding the benefit of full disclosure and the impact of beneficial ownership transparency. Besides, how to encourage the implementation of BO in mining licenses in the provincial level, which belongs to the authority of provincial government.

While BO disclosure in the global context, BO information exchange among countries still face some obstacles, including the endless bureaucracy and the process which depend on how BO information is classified. Information exchange only can be done after the Mutual Legal Assistance (MLA) is in place, and for that, there must be criminal action first.

Closing the discussion, Isro reminded that BO disclosure is an instrument, not an end. It is important to look over the area of BO data utilization. For instance, to ensure the state revenue. “Because many cases show that permits and area are increasing, but tax revenues do not increase,” said Isro.