Strengthen civil society engagement in promoting transparency, reducing tax evasion and illicit flows and advocating for responsive uses of revenues from extractive activities in resource rich areas

“Empowerment and enhancement community participation are required for the realization of equitable, responsive and sustainable economic development as well as the implementation of extractive governance reforms in natural resources rich area.” – Meliana Lumbantoruan, Program Manager

Despite in the past three years commodity prices are continues to decline, extractive sector still play significant role in Indonesia’s economy. Oil, gas, minerals and other related materials contributed 10.49% to the economic growth (GDP, 2014)-based on National Statistical Body (2015). However, the sector still has a lot of homework to do, such as on (1) how to provide adequate transparency mechanism (such us on in data on production, operational costs, revenues and revenue sharing, revenue management and budget spending); (2) pushing corporate transparency is important to reduce and tackle tax avoidance; and (3) developing transparent and accountable system to generate more revenues to improve public services and increase the welfare of the people.

Regarding to those, the presence of civic participation and voice, effective implementation of progressive regulations on transparency and accountability, and significant reduction of tax evasion/avoidance and illicit flows are keys to promote equitable and sustainable development in the country.

Therefore, Publish What You Pay (PWYP)  Indonesia with support from The Ford Foundation initiate a program to address those main concerns by conducting community empowerment and advocacy to encourage greater reform in extractive industries governance (particularly on transparency, accountability, and public participation and regulation reform) for better equitable and sustainable economic development.

Theory of Change

A good monitoring system as well as effective implementation of reformist regulations would be able to reduce corruption and illicit flows of revenue and tax flows. By closing the gap of asymmetric access to information and encouraging citizen participation and voice, the government is expected to become more responsive in handling citizen’s complaints and improving public services. Strong civil society advocacy and policy monitoring on revenue management and spending would also help to ensure where the revenue of natural resources should be spent, which should include the provision of affordable energy to poor and marginalized families. There should be a strong civil society participation in the multi-stakeholders Energy Coordination and Supervision (Korsup Energi) body that is coordinated by the Corruption Eradication Commission (KPK) as well as other Government initiative such as energy policy, one map and one data initiatives.

In the long term, theory of change would fill the gap of community capacity, improve policy reform, encourage an inclusive and equitable economic policy, reduce inequality and mitigate climate change to promote sustainable development (SDGs). Those approaches would also be implemented within the context of the participation of Indonesian government and civil society organizations in global and multilateral initiatives such as the Extractive Industries Transparency Initiative (EITI), Open Government Partnership (OGP) and Sustainable Development Goals (SDGs). Last but not least, development needs innovations to make it exciting and dynamic. PWYP Indonesia would make use of inclusive technology interventions, develop open data initiatives and involve youth participation to promote progressive development and meaningful social change. Yes, we learn, we innovate and we make changes!

Goal

Achieve equitable and sustainable economic development.

Objective & Outcome

1. Improving the transparency and accountability of extractive industries, especially in oil-gas, mineral and other natural resources

Outcome:

• Regulations on the transparency and accountability of extractive industries are improved.
• There are improvements in the transparency and accountability of tax and revenue system of the extractive industries.
• Public monitoring system is in place to check corruption and illicit financial flows.
• There are improvements policy in corporate transparency through data and information disclosure/reporting, beneficial ownership transparency, and open contracting.

2. Encouraging inclusive and equitable economic development to address inequality

Outcome:

• There are improved revenue management and open budgeting for poverty alleviation to address inequality in resources rich regencies.

3. Strengthening inclusive civic engagement in policy making process and raising public awareness in extractive resource governance that promotes economic justice and sustainable development

Outcome:

• Women and poor and marginalized groups participate in policy making and budgeting to make resource allocation responsive to their needs.
• Youth groups participate in improving governance in the extractive sector to promote economic justice and sustainable development.

Basically, the program will apply several approaches i.e. firstly, empowering the women, poor and marginalized groups as well as youth groups at the national and local level through outreach and setting up Community Centre in rich natural resources regencies; secondly, educating policy makers and public through public policy dialogues and dissemination of policy briefs; thirdly, mainstreaming public information transparency principles, open data, accountability and gender responsive and pro-poor approaches into the government’s tax reform agenda, and fourthly, conducting media outreach and developing creative communication strategy to support all activities.

The program activities will be comprised of:

1. Conduct policy analysis on the impact of regulations at the national and local level and use the recommendations to educate the public and policy makers as well as present to executive and legislative to make them more aware regarding public demand for regulatory reforms.
2. Organize several policy discussions to formulate inputs and recommendations on promoting policy reform through Extractive Industry Transparency Initiative (EITI) and Open Government Partnership (OGP).
3. Conducts monitoring on corruption, illicit financial flow and tax evasion particularly in extractive sector by doing research and also actively involve as KPK’s partner in Korsup Energy.
4. Organized public policy dialogue and set up the campaign about how to maximize corporate transparency in the extractive sector and mainstream the principles of Beneficial Ownership and BEPS into policies and will expand the network to global level to enrich the analysis.
5. Develop fiscal models, monitor planning and budgeting processes, and assess the effectiveness of programs at the local level to reduce poverty and inequality.
6. Engage women and youth groups to participate in the management of extractive resources by doing field studies, community meetings, campus talks, and youth competition in article writing, infographic development, and media and communication campaign.

The program will be implemented at least in 9 (nine) resource rich provinces specifically Aceh, Bengkulu, South Sumatera, Riau, East Kalimantan, East Java, DIY Yogyakarta, West Sulawesi and West Nusa Tenggara, and do not rule out the possibility for Papua, West Papua, and other natural resource rich areas.

This program would also involve related governments and several stakeholders such as OGP secretariat in the Presidential Staff Office (KSP), EITI Secretariat, Coordinating Ministry of Economic Affairs (CMEA), Ministry of Energy and Mineral Resources (MEMR), Ministry of Finance (MoF), Directorate General of Tax (DG Tax), Anti-Corruption Commission as well as local governments.