The government affirms its commitment to prevent and eradicate corruption and efforts to criminalize money laundering by combating the abuse of ownership of companies that receive beneficial ownership.

“One manifestation of this commitment is to combat the abuse of the role of companies and their trusts as a means of corruption and to increase the transparency of beneficial ownership of economic activities,” said the Head of the National Development Planning Agency (Bappenas), Bambang Brodjonegoro, at the Global Conference on Beneficial Ownership in Jakarta, Monday (23/10).

Bambang said that beneficial ownership transparency is a very strategic and cross-sectoral issue, especially related to preventing and eradicating corruption, money laundering, terrorism financing, state revenue from taxation, the extractive industry, and investment.

Especially in the extractive industry or industries whose raw materials are obtained directly from nature, there is a global standard for transparency of state revenues from the extractive sector known as the Extractive Industries Transparency Initiatives (EITI). In Indonesia, the initiative to transparency state revenues from extractive industries began in 2007 when they expressed support for EITI.

Presidential Regulation (Perpres) on Transparency of State Revenues and Regional Revenues derived from extractive industries, signed in 2010, as an EITI member country, Indonesia has published a roadmap for beneficial ownership transparency in early 2017. In 2020, Indonesia must be able to publish its name, domicile, and nationality of the person or group of people controlling extractive industry companies in the EITI Report.

The disclosure of beneficial ownership itself is part of the framework for the principle of anti-income scavenging and profit transfer, or what is known as Base Erosion and Profit Shifting (BEPS). The push for information disclosure occurs in almost all parts of the world, especially in developed countries, to catch up with their taxpayers who place and transfer their tax obligations in tax havens.

Global trends are changing so that all countries agree to fight against tax evasion and evasion that is widely practiced in tax havens. Indonesia has also previously committed to automatic exchange of information (AEoI) starting in September 2018.

Bambang added that Indonesia is currently pushing for a better data system, including beneficial ownership databases, interfacing data, natural resource data, reforming financial data with tax data, and one data and one map policy.

“The government realizes that beneficial ownership data, natural resource data, map data, and good tax data are several prerequisites for accelerating the use of an evidence-based policy approach in policymaking and development priorities,” said Bambang.

Evidence-based policy is a policymaking process that is carried out based on an appropriate study of evidence, not based on political pressure or mere instinct. Bambang stressed the importance of transparency of beneficial ownership of companies for investment development.

“Beneficial ownership transparency is closely related to investment. “Investors’ confidence in the financial market depends very much on the availability of accurate data, which provides transparency regarding beneficial ownership and the control structure of a public company,” said Bambang.

Bambang said the importance of transparency is not only for public companies but also for private companies, especially when transacting with foreign companies with compliance standards regarding information transparency regarding the beneficial ownership of their partners.

The current government’s efforts to encourage investment convenience and foster trust for investors, continued Bambang, must also be accompanied by efforts to present an investment with integrity and quality.

He reminded that the ease of investing should not be used as a space for perpetrators of corruption to take personal benefits. One of the efforts taken is to encourage disclosure of who owns the investment company.

“Beneficial ownership transparency can provide further benefits for companies operating in Indonesia, including reducing financial risks,” said Bambang.

The Expert Staff for Institutional Affairs of the National Development Planning Agency (Bappenas), Diani Sadia Wati, added that shortly the government would issue a Presidential Decree regarding companies’ beneficial ownership. Currently, the Perpres drafting process is in the stage of finalizing the government level.

“In terms of the Presidential Decree, the actual content will be, of course, there will be provisions with the steps from the previous regulation, yes not only the extractive industry but also more generally, it covers more areas of terrorism financing, then money laundering, because these are interrelated with one another,” said Diani.