JAKARTA – Coalition of Publish What You Pay Indonesia appreciated the issuance of Extractive Industries Transparency Initiative (EITI) Report for fiscal year of 2014 and roadmap of beneficial ownership as well as portal of Extractive Industries (EI) Openness in Indonesia by Coordinating Ministry for Economic Affairs of the Republic of Indonesia. These are part of the commitments of Government of Indonesia with the support and participation of multi stakeholder, both the industry and civil society, to promote information openness also transparent and accountable extractive industries in Indonesia. Also to maintain ‘compliance’ status of Indonesia in the membership of global standards EITI. Through development of EI portal, public is expected to gain more convenient access to obtain and learn data and information about the industry.

In accordance with the EITI standards, all the member countries of EITI shall open and publish the revenue (tax, non-tax, devident) which has been reconciled independently, how the payment flow occurs, revenue sharing fund distributed to the sub-national, as well as others contextual information, including trade (export-import), economic contribution of extractive industries, contract and licensing, cadastral information/map, revenue sharing fund, ans beneficial ownership. Who should open the data? EITI obliges data and information disclosure from the government as well as the industry, either multi-national company or state owned enterprise. In Indonesia, extractive industries sectorwhich are applied within EITI standars comprises of oil and gas, mineral (nickel, copper, gold, tin and bauxite), and coal sector.

Lukita Dinarsyah, Secretary of Coordinating Ministry for Economic Affairs conveyed in his opening speech during the report launching held in Sawala Room-Office of Coordinating Ministry for Economic Affairs on Wednesday, 24 May 2017, “In line with the implementation of EITI, in 2006, Indonesia has ratified UN convention on the Anti Corruption-UNCAC (United Nations Coonvention Against Corruption) through Law number 7 year 2006. As the follow-up, we have formulated National Strategy of Corruption Prevention and Eradication (Stranas PPK) regulated under Presidential Decree 55/2012, where the elaboration of the Stranas is detailed in the Action of Corruption Prevention and Eradication. EITI report issuance is among the action conducted by Coordinating Ministry for Economic Affairs of the Republic of Indonesia.

Maryati Abdullah, National Coordinator of PWYP Indonesia cherished Implementig Team consisted of government, industry and civil society which have been put their hard work to complete EITI report and roadmap of BO. “The release of EITI report has proved the commitment of Indonesia to promote transparency and accountability of extractive industries governance. Besides part of EITI standards, formulation of the roadmap of BO disclosure is part of Indonesia’s commitment in several international agreements, such as recommendation 24 and 25 of Financial Action Task Force (FATF); G20 High Level Principle on Beneficial Ownership Transparency; The global standard on Automatic Exchange of Information (AEOI) related to beneficial ownership”, added Maryati, who’s also served as Representative of Asia Pacific Region in the Global Council of Publish What You Pay.

Aryanto Nugroho, civil society representative in the Implementing Team of EITI expects the findings and recommendation of EITI report can be followed by concrete measures of related stakeholder for broader improvement of extractive industries governance. Thus, the report is not merely a report. Aryanto continues, the quality of transparency also shall be improved. For instance, the level of disclosure of contract/permit also cadstrial information.

Roadmap of Beneficial Ownership Transparency in Indonesia

The newest EITI Standard requires BO disclosure by 1 January 2020. Beforehand, member countries of EITI shall formulate roadmap of BO transparency by 1 January 2017, which consists of policies and preparation toward BO transparency in the extractive industries. The disclosure will cover the name, nationality, and country of origin of beneficial ownership of mining as well as oil and gas industry.

The Roadmap of BO Transparency in Indonesia states three stages to be done towards 1 January 2020. First stage, [2017] defining BO in accordance with the Indonesian context, including the definition, indicator, tailor-made concept from the industry involvement in the political agenda (Politically Exposed Person-PEP) and its obligation, level of information to be disclosed, and the framework of transparency design (database, data guarantee, data collection, time accuracy. Second stage, establishing and developing the institutional and legal framework of BO by harmonization of regulation supporting BO transparency. Third stage, [2019] implementing BO transparency, including establishment of monitoring and incentive/dis-incentive giving mechanism.

Maryati affirms that the implementation of BO transparency shall be in line with the reformation spirit of improvement of extractive industries governance. “This roadmap shall not add a stack of documents without concrete actions. The government must commit to execute all stages toward BO transparency, including how to coordinate all related stakeholders, such as Ministry of Energy and Mineral Resources, Ministry of Finance, Ministry of Law and Human Rights, Anti Corruption Commission, Financial Transaction Reports and Analysis Centre (PPATK), Bank of Indonesia, Financial Services Authority, to accelerate the implementation as well as eliminate the challenges toward BO transparency.”

“In general, the absence of BO information is able to contribute to potential economic and state lost, especially due to tax avoidance. Study of PWYP Indonesia (2016) revealed the main causes of tax avoidance are weak, invalid, and outdated data of tax payers, double tax avoidance triggered by invalid information, also regulatory issues in disclosing BO data,” stated Maryati.

Maryati added, the disclosure of BO information can prevent illicit financial flows (IFF). “The report of Global Financial Integrity in 2014, indicated that Indonesia ranked as seventh of 10 ountries with the biggest IFF. Total IFF in Indonesia during 2003 -2012 is estimated reaching US$ 187,884 million or equivalent to Rp 169 trillion per year. In 2014, the IFF in Indonesia is predicted amounting Rp 227.7 trillion or 11.7 % of the Revised Government Budget and Expenditure (APBN-P) in the same year. For mining sector, the IFF reached Rp 23.89 trillion, which contributed by miss-invoicing trade in Rp 21.33 trillion and hot money narrow in Rp 2.56 trillion.”

Aryanto highlighted that disclosure of BO information ease the law enforcer to seek the identity in dismantling criminal case, prove money laundering crime, maximize asset recovery from the perpetrators of criminal acts of corruption and money laundering.

“BO openness also facilitate the government to collect non-tax receivable of oil and gas also mining companies who haven’t complete their obligations. In the mining sector for example, pending settlement of non-tax receivable form thousands mining permit (IUP) holders amounting Rp 3.949 trillion is due to the inaccuracy of IUP holders and owners address”, explained Aryanto.

“Above problems also found in the oil and gas sector, where Coordination and Supervision of KPK in the energy sector revealed non-tax receivable from 143 Contractors Cooperation Contract (KKKS) including remaining firm commitment in 25 area of work amounting US$ 310 million, US$ 2.5 million of signature bonus, US$ 575 thousand of goods and services and US$ 5.8 million of operation guarantee. The challenges are also the same, the difficulty to track the KKKS,” continued Aryanto.

Editorial Notes

  1. EITI is an international standard on state revenue reporting form extractive industry (oil, gas, coal and mining), which the process involves multi stakeholder, i.e: government, industry, and civil society. EITI has been implemented in 51 countries, including Indonesia, and has been acknowledged as global standard to promote transparency ad accountabilirt of state revenue and company payment from extractive industry.
  2. The Impementation of EITI in Indonesia is regulated under Presidential Regulation No. 26/2010 on State Revenue and Local Revenue Transparency from Extractive Industry.
  3. On October 2010, Indonesia obtained status as ‘candidate country’ and after being assessed accordance with the 2013 EITI Standard, Indonesia was approved as compliance country in 15 October 2014.
  4. 2016 EITI Standard can be downloaded in the following link: https://eiti.org/document/standard
  5. EITI reports, press release, data and other information related to EITI can be accessed in http://eiti.ekon.go.id/ and http://www.eiti.org/
  6. Portal of Extractive Indutries can be accessed here: http://portal-ekstraktif.ekon.go.id/