Jakarta—Publish What You Pay Indonesia coalition appreciated the signing of Memorandum of Understanding (MoU) on Strengthening and Utilizing the Beneficial Ownership Data Base in the Corporate Crime Prevention Framework, last Wednesday (3/7) in Jakarta. This MoU signed by the Ministry of Law and Human Rights, Ministry of Finance, Ministry of Energy and Mineral Resources, Ministry of Agriculture, Ministry of Cooperatives and Small Medium Enterprises (SMEs), Ministry of Agrarian and Spatial Planning/National Land Agency

The signing of the MoU which was also attended by the Deputy Chairperson of the Corruption Eradication Commission (KPK) was the implementation of a preventive action plan of Presidential Regulation (Perpres) number 54 of 2018 concerning the National Strategy for Prevention of Corruption, which is one of its action plan related to the provision and use of Beneficial Ownership databases (BO).

This MoU is also the implementation of the Presidential Regulation no 13/2018 concerning the Principles of Recognizing Beneficial Owners of Corporations in the Context of Prevention and Eradication of Money Laundering and Terrorism Financing Crimes. This regulation requires every corporation (such as limited liability companies, foundations, associations, cooperatives, limited partnership, firm partnership, and other corporate forms) to establish, report, and renew the Beneficial Owner of the corporation. This regulation also mandates the utilisation of Beneficial Ownership data by the relevant agencies to prevent corporate criminal acts and improve the performance of the sector that is the core issue and the authority of each relevant ministries/agencies.

Maryati Abdullah, the National Coordinator of PWYP Indonesia, conveyed that the signing of the MoU shows that corruption eradication and prevention’s efforts through preventing the corporate criminal acts are already in the ‘right path’. The government’s efforts to strengthen the beneficial ownership database should be supported amid economic challenges, more sophisticated company actors in using complex and tiered corporate structure which create a loophole for corporate criminal acts, both in the form of tax evasion and tax avoidance, corruption, money laundering, and terrorism/drugs funding, and other type of crime.

Not only for the sake of law enforcement, a reliable, accurate, and easily accessible of corporate benefit owners database can improve the performance of the state revenue and taxes, also prevent the risks of economic activities such as the procurement of good and services, to infrastructure projects and public services that concern the lives of people. On the other hand, Beneficial Ownership disclosure for the private sector certainly can improve the fair and competitive performance and economic ecosystem.

Aryanto Nugroho, PWYP Indonesia’s Advocacy and Program Development Manager, reminded that the signing of the MoU must be accompanied by a spirit of transparency and public information disclosure following the provision of Act no 14/2008 concerning the Public Information Disclosure, as stated in article 29 of Presidential Regulation no 13/2018. Indonesia as one of the implementing countries of Extractive Industry Transparency Initiative (EITI), has a roadmap of Beneficial Ownership transparency in the extractive sector, also has been obliged to publish the beneficial ownership data on oil and gas companies and mineral and coal mining by January, 1st 2020, or next year.

Aryanto also urged the Government to concretely do the follow-up actions, such as improving regulations, data management of systems and institutions, data verification mechanisms, interfacing mechanisms and interoperability of data between agencies, data exchange mechanisms and mechanisms of the data publication. These steps have the right momentum with the Presidential Regulation Number 39 of 2019 concerning One Data, which issued a few days ago. A robust BO database must be accompanied by clear and precise efforts in its utilisation.

“At least 6 (six) ministries have signed on the MoU must be utilised the existing database with effective and efficient coordination. Both in terms of data strengthening, synchronisation, utilisation, capacity building, and other things needed to optimise the beneficial ownership data strengthening and usage. The Corruption and Eradication Commission and Public certainly will continuously monitor, whether this MoU has a real and positive impact on the prevention and eradication of criminal acts, as well as related to increasing the state revenues/tax, and the performance of corruption prevention in all sectors of government.

Furthermore, Maryati Abdullah emphasised that the implementation of BO transparency is in line with the implementation of good governance, especially in the openness and transparency era, especially in the ecosystem of information technology and cross country-global economic activity which exceeds the jurisdictional boundaries. It needs to remind that Indonesia becomes a pioneer in Open Government Partnership (OGP) at the global level, so it needs to encourage this progress to other countries through cooperation with other countries which mutually beneficial.

Moreover, several commitments have been agreed upon by the government through international cooperation. Starting from the High-Level Principle of Beneficial Ownership and Transparency initiative, Indonesia’s membership in FATF (Financial Act Task Force), also the commitment to banish the BEPS (Base Erosion Profit Shifting) which continues to be strengthened in the G20 cooperation. “Indonesia must be able to play its role in the global collaboration which beneficial to the national interests, which to achieve that it is undoubtedly requires our domestic readiness—both the regulations and the development of an effective system.