Press Release PWYP Indonesia Coalition
067/Ex-J/SP/Koord/VII/2020

President Joko Widodo issued and signed Presidential Decree Number 82 of 2020 on The Coronavirus Disease (Covid-19) Handling and Economic Recovery Committee on Monday, July 7, 2020. Along with this regulation, President reduces bureaucracy by dissolved 18 work teams, body, and committee. One of them is Extractive Industries Transparency Teams (Article 19 Section 1 Letter A). However, this regulation mentions the work of Extractive Industry Transparency Team will be conducted by the Ministry of Energy and Mineral Resources and Ministry of Finance (Article 19 Section 3).

Team that was formed by Presidential Decree Number 26 of 2010 in the era of president Susilo Bambang Yudhoyono (SBY) is a multi-stakeholder group that consists of several ministry/government agencies, extractive industries company association (oil, gas, and mining), also representation from civil society. This transparency teams have received a mandate to determine and control extractive industry transparency mechanism (oil, gas, and mining sector) to follow international standard EITI (Extractive Industries Transparency Initiative), Indonesia is one of the member countries which succeed in obtaining compliant status.¹

EITI is an international standard regarding transparency, accountability in the extractive industries sector (oil, gas, coal, and mineral) where the process involved government, industry/business, civil society group. EITI has been applied in 53 countries in the world, including Indonesia. Basically, EITI has report standard and disclosure information on tax payment and state revenue from the company’s extractive industries which operated in various countries. both at the national level or shared to the producer area.² The report is verified by an independent auditor. The New EITI Standard (2019) has been pushed disclosure on trade commodities aspect,³ open contracting,⁴ and beneficial ownership (BO) transparency from the corporation.⁵ The purpose of that step is to prevent the corrupt practice, tax evasion and to highlight social, environmental, climate, and gender issues. The new EITI standard introduced mainstreaming report system in government mechanism which possible transparency and reconciliation in systemic.⁶

Fabby Tumiwa, Executive Director of IESR and the former board of EITI in the international level from civil society representation said that “It is unfortunate, the government has been stopped EITI Team, even though, EITI is an international standard for state revenue transparency which Indonesia had been extremely struggled to join this initiative in 2010. EITI is needed due to the multi stakeholder basis: government, business, and civil society. This dissolution showed the president’s low commitment to improving oil, gas, mineral, and coal mining governance which is being key issued to push investment and build public confidence.”

Maryati Abdullah, National Coordinator of Publish What You Pay (PWYP) Indonesia as well as an ambassador for the Open Government Partnership (OGP) and also she was part of the multi-stakeholder groups in EITI Indonesia regretted this: “This is a setback on pushing good corporate governance in the extractive sector, in the midst of weak performance and challenging time to energy and extractive industries. Moreover, Indonesia’s role in EITI global level is quite important, in this case, Ego Syahria (Secretary-General of the Ministry of Energy and Mineral Resources), recently elected as a member of the EITI International board representing countries in the Asia Pacific region.”

“This transparency mechanism and multi-stakeholder model gives trust for economic recovery in the future, especially since EITI has been proven to make increasing company compliance in paying royalty and tax -because companies’ performances are always monitored and those reports shared to public. EITI also could prevent the practice of tax evasion which is one of the causes of Indonesia’s low tax ratio”⁷

Aryanto Nugroho, a representative of civil society in the Extractive Industries Transparency Team, also admitted that he was surprised by the issued of Presidential Decree, because previously a transition team was being formed for the process of EITI transition from the Coordinating Ministry for the Economic to the Coordinating Ministry of Maritime and Investation, as well as revision Presidential Decree to be in line with the latest EITI standards.⁸ “This EITI is very important because it pushes transparency of contracts, disclosure beneficial ownership from corporations that can minimize the risk of tax evasions such as through transfer pricing and illicit financial flow,”

Ermy Ardhyanti, one of civil society representatives in EITI questioned whether the Dissolution Team is dissolved, or is EITI secretariat was moved? further clarification is needed. ”

Erry Riyana Hardjapamekas, the former head of the Corruption Eradication Commission (KPK), One of promotor and founding of EITI Indonesia with Mr. Emil Salim and also former an EITI International Board representing Indonesia, also regretting this condition. EITI should be able to further increase transparency and corruption prevention standards in the extractive sector, so that it can gain the trust of investors and industry as well as from the public because state revenue and tax are becoming more compliant and transparent.

“Hence, if Indonesia wants to fulfill EITI standard and if the functions and tasks of EITI Indonesia are transferred to the Ministry of Energy and Mineral Resources and the Ministry of Finance, the Minister is recommended to form a Multistakeholder Team under the Ministry to carry out the EITI as mandated in Presidential Decree Number 82/2020, by fulfilled EITI standard that has been applied internationally”.