As part of the international community, Indonesia has made high level commitments on corruption prevention, eradication and in efforts to combat money laundering. One key commitment is fighting the misuse of companies and trusts as vehicles to carry out corruption, and improve beneficial ownership transparency in economic activities.

Beneficial Ownership (BO) transparency has become a strategic and cross-sectoral issue. The prevention and eradication of corruption, money laundering, terrorism financing, and strengthening tax revenue collection in the extractive industries and investment sectors are clearly related.

As a member of the G20, Indonesia has agreed to the High-Level Principles on Beneficial Ownership Transparency that emphasize the importance of transparency and accurate BO information that is accessible by authorized institutions. Since 2015, the Corruption Eradication Commission (KPK), as Indonesia’s focal point to the G20 Anti-Corruption Working Group (ACWG), has been leading the coordination between ministries and related institutions, resulting in a plan that has been conveyed to the 2015 G20 ACWG. Further, in 2016-2017, the anti-graft body started a study on beneficial ownership transparency.

BO information disclosure is part of Base Erosion and Profit Shifting (BEPS) principles. Calls for the disclosure of such information occur all over the world, especially in developed countries, aiming at collecting taxes from their citizens who place and shift their taxes to tax haven jurisdictions. The global trend has therefore changed and all countries have now agreed to fight against tax avoidance and evasion, which usually takes place in tax havens. Indonesia has made a similar move, especially since it also committed to the Automatic Exchange of Information (AEoI) planned for September 2018, and will continue its commitments to supporting and taking part in the global movement related to taxation.

In the extractive industry (EI), the global standard for the transparent management of extractive revenue is the Extractive Industries Transparency Initiative (EITI). In Indonesia, the initiative to transparency in EI revenue started in 2007 when the government stated its support to EITI. In 2010, the Indonesian president signed a Presidential Regulation on National and Subnational Revenue Transparency. As a member of EITI, Indonesia published a roadmap on BO transparency earlier this year. The document was produced to comply to the 2016 EITI Standards that requires all members to publish a BO disclosure roadmap by the end of 2016. The next step in 2017 is to start the process for disclosing BOs as outlined in the roadmap. By 2020, Indonesia intends to publish in its EITI report the name, domicile and nationality of person or a group of persons who control(s) extractive companies.

BO transparency is also closely related to investment. Investors’ trust towards the financial market is highly dependent on the availability of accurate data that shows BOs and the control structure of public companies. The importance of such transparency does not only apply to public, but also private companies, especially when doing transactions with foreign

companies that require high compliance standards on BO information transparency from their partners. However, the existence of beneficial owners with great voting rights adds the incentive to control assets and use company powers to serve only selected investors. In the end, BO transparency is not only related to company development, but also law enforcement.

The government’s effort to ease doing business in the country as well as to improve investors’ trust must go along with the efforts to entice integrity and quality investments. The ease of doing business must not become a way for corrupt individuals to benefit. One of the ways to prevent this is by pushing for the disclosure of the beneficial owners of companies that are going to invest. BO transparency can give more benefits to companies operating in Indonesia, such as reducing financial risks

In an effort to push for BO transparency in Indonesia, a multi-stakeholder collaboration is absolutely necessary. A series of events have been taking place, involving the Coordinating Economic Ministry, National Development Planning Ministry (Bappenas), Finance Ministry, Energy and Mineral Resources Ministry, Law and Human Rights Ministry, Foreign Affairs Ministry, Office of the President, the Financial Transactions Report and Analysis Centre (PPATK), the Corruption Eradication Commission (KPK), the Financial Service Authority (OJK), Bank of Indonesia, academicians, professional organizations, Publish What You Pay (PWYP) Indonesia, Transparency International-Indonesia (TII), and the Natural Resource Governance Institute (NRGI).

EITI International praised Indonesia’s progress towards BO transparency, and has therefore requested the Indonesian Government to host its first beneficial ownership global conference. This conference is slated for 23 to 24 of October 2017 at Fairmont Hotel, Jakarta. Delegates from 52 EITI member countries, ministries and agencies, SOEs, subnational governments, academics, industry, development partners, international organizations, professional organizations, CSOs and the press are expected to participate in the event.

As host to this event, Indonesia has the chance to learn and benefit from BO transparency practices of other nations, understand the expected burdens and challenges especially with regards to empowering the required regulations, as well as strengthening the country’s commitments to regulate BO through a strong umbrella regulation to cover all sectors. Extractives is just the start.

In his opening remarks, National Development Planning (Bappenas) Minister Bambang Brodjonegoro said that BO disclosure was important to support Indonesia’s programs and commitments, such as the AEoI. Bambang said that as one of the 15 largest economies in the world in terms of GDP, the country’s tax ratio is still very low and BO transparency can help improve this.

“Our tax ratio is only slightly more than 11 percent. It’s very low,” Bambang said on Monday (23/10). “Even compared to our neighbors in ASEAN, as well as, of course, compared to the OECD member countries.”

“And one of the reasons for this low tax ratio is because we cannot trace the Indonesian assets that are being held everywhere all around the world,” he said.

However, Bambang also reminded that a global commitment was utmost important in order for the disclosure of BO information to succeed. “I believe a global commitment is very critical. And it’s not just a majority of countries; it has to be supported and committed by all countries in the world,” he said.

“Otherwise […] there will be few countries that not committed or be part of the movement that will take advantage,” he said.

Maryati Abdullah, National Coordinator of Publish What You Pay, said that the Government of Indonesia needs to accelerate the enactment of Presidential Regulation on Beneficial Ownership Transparency. Because in the political context, there are many Political Exposed Person (PEP) which involved in business activities through anonym companies.

“We also need to accelerate the regulations synchronization in the national level, so there is open register for national and international companies and its supply chain to comply with beneficial ownership transparency,” added Maryati.
For further information, please contact:


Maryati Abdullah

National Coordinator, Publish What You Pay (PWYP) Indonesia

Asri Nuraeni

Communication Officer, Publish What You Pay (PWYP) Indonesia /