Government of Indonesia Strengthens Its Commitment in Disclosing Beneficial Ownership Data
As the member of Extractive Industry Transparency Initiative (EITI), Government of Indonesia strengthens its commitment to disclose beneficial ownership (BO) in order to combat corruption, money laundering, tax evasion and terrorist financing, as stated by Bambang Brodjonegoro, Minister of National Development and Planning in his opening remark in the Global Conference on Beneficial Ownership Transparency, last 23-24 October in Jakarta.

This global conference is part of Indonesia’s commitment to fight against corruption as well as promote Automatic Exchange of Information (AEoI), which has been stated in 2016 Anti-Corruption Summit in London.

“Although Indonesia is one of 15 countries with the biggest GDP in the world, our tax ratio is really low, slightly greater than 11 percent. Even being compared to the neighbor countries in ASEAN and OECD member countries, it is still low. One of the reasons is due to the inability in tracing the assets placed outside Indonesia. Thus, it’s important to succeed the BO openness,” said Bambang.

Fredrik Reinfeldt, Chair of EITI International in his opening mark said that the conference is a milestone in global fight against corruption. The Panama leaks become an important achievement in disclosing BO data.

The importance of BO disclosure also being highlighted by Yemi Osinbajo, Vice President of Nigeria in his opening mark. African countries loss USD 50 billion per year due to illicit financial flow caused by anonymous company. The secrecy in this sector favors the corrupt and the criminal. Therefore, revealing the anonymous company is a key to combat illicit financial flow, corruption, money laundering, and terrorist financing.

“It’s not only the problem of developing countries, but in fact it is a global problem which needs collective strategy,” affirmed Yemi. 

Spoke as a panelist in the plenary session "Ending Company Anonymity, The Key Fighting Corruption, is Ignasius Jonan, Minister of Energy and Mineral Resources, Indonesia. He said that as country which does not adopt the common law system, Indonesia does not distinguish legal ownership and beneficial ownership. However, so far, Ministry of Energy and Mineral Resources has issued the Ministerial Regulation Number 48 Year 2017 on Monitoring of Business Operation in the Energy and Mineral Resource Sector, which mandates the mining companies to disclose information about their executive, commissioner, and shareholder.

In the other session, Yanuar Nugroho, Representative of the Executive Office of the President, Indonesia said that the implementation of BO transparency in Indonesia will face two challenges. First, how to integrate data in an interchangeable format. This will be the main agenda of this BO initiative. The second is how to verify the disclosed BO data.

“By 20 October 2017, regulation on BO has been signed by 6 related ministers. This regulation is expected to address the challenges in BO implementation,” stated him. Being complemented with the road map of BO transparency, government of Indonesia is highly expected to be able develop BO data soon.

The conference is the first global conference which put BO transparency as focus of discussion. Attending the conference are ministries, representative of business entities, civil society and also scholars from 52 member countries of EITI. [AN]

Advancing Transparency and Anti-Corruption Movement in the Natural Resource Governance in Asia Pacific

Natural resources give a significant contribution to the state, where the natural resources become the driver of economic growth in Asia Pacific. Unfortunately, bad governance and systemic corruption still hinder the effort to pursue sustainable development. As conveyed by Jelson Garcia, Asia Pacific Director of NRGI in Regional Meeting on Advancing Transparency and Anti-Corruption Movement, in Jakarta last 21-22 October, right before the Global Conference on Beneficial Ownership Transparency.

“Seventy-eight (78) countries contribute to the largest global production of oil, gas, and copper. In 2014, same countries raised over USD 1.2 trillion in resource revenue. In that year, the contribution from nineteen resource-rich nations in Asia Pacific was at least USD 109 billion,” said Jelson.

Wahyu Dhyatmika, Chief Editor of, in one of the sessions, explained how Panama Papers in 2016 published more than 214.000 offshore entities as well as 140 politician and public officials. For Indonesian context, Panama Papers revealed businessman name related to the Zatapi import case.

In 2017, Pertamina imported 600 barrel Zatapi oil, worth USD 58.6 million. Based on the oil assay analysis, the price is higher USD 11.72 per barrel. The Zatapi importer is Gold Manor, whose controllers also control Global Energy Resources Pte. Ltd. Panama Papers disclosed that Gold Manor and Global Energy Resources have the same address in Singapore. While Global Energy is the main oil importer in Indonesia for years and controls 33% of oil import in Indonesia through Pertamina Energy Service Ltd, which owned by PETRAL.

Learn from Panama Papers scandal, Wahyu said that the availability of data regarding the structure of company ownership is still limited. “We cannot capture the big picture of collusion between cronies or families of the politically exposed person (PEP),” said Wahyu.

Dyveke Rogan, Policy and Regional Director of Extractive Industry Transparency Initiative (EITI), explained the importance of beneficial ownership data disclosure through EITI. “Ending the company anonymity is a key to fighting corruption,” said Dyveke in other sessions.

Dyveke continued, beneficial ownership transparency could improve the investment climate, reduce the financial risk, prevent corruption and illicit financial flow, improve the law enforcement and also increase trust and accountability between government and company. “The key is how government, company, and public understand the benefit of this disclosure,” said her.

Many roles can be played by journalist and civil society in promoting transparency in the extractive sector. Journalist and civil society can hold the government accountable, encourage the company to pro-actively disclose their beneficial ownership and create public demand in accessing and using the beneficial ownership data. [AN]


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Defining Politically Exposed Persons in Encouraging the Disclosure of Company Ownership 

 The efforts to foster good governance and corruption eradication through PEP’s (Politically Exposed Person) mechanism in general still encountering many challenges. The Part of the reason lies in regulatory aspects.

Cari Votava, Senior Financial Sector Specialist from World Bank highlighted the issue of PEP regulation. According to her, many countries still do not have a clear definition framework. Each country needs to formulate its own PEP definition by considering the issues at hand and the national structural characteristics. This was stated in the parallel discussion on Political Exposed Person and Asset Declaration as an integrated agenda of Global Conference on Beneficial Ownership Transparency, 24/10.

“Clear and objective definition also accordance with the local context are 
important aspects, since they affect the quality of the enforcement”, added Cari Votava. On the other hand, the clear definitions will also be necessary to minimize any avoidance by disobedient parties whereas they clearly belong to PEP categorization.

Referring to the national context, Indonesia, in fact, is already have fair and clear regulatory framework. Regulation on PEP 
in Indonesia can be seen on Bank Indonesia’s Regulation No. 12/20/PBI/2010. Furthermore, it’s also stipulated on PPATK (Indonesian Financial Transaction Reports and Analysis Center) regulation, No. Per-02/ 1.02/ PPATK/ 02/ 15. In these rules, Indonesia has defined PEP in detail also which parties belong to PEP’s category.

Above regulations are quite comprehensive because it has regulated other parties related to the officials who are included in PEP. The existing definition has been scrupulously considered in order to target the intended parties (eg from family, relatives, etc.).

“In practice, doing business with family and relatives of the PEP’s is as risky as having direct business with the PEP itself. PEP can serve as an instrument to prevent the negligible risks that may occur in business relationships with those relatives”, said Hardianto from Corruption Eradication Commission Indonesia.

On the other hand, the definition of PEP is still vague in certain aspects. For example, the link 
to the categorization of influential officials. Because oftentimes, in practice officials who no longer served still have a forceful influence in a certain period of time. In this regard, Ghazaal Habibyar, the Afghan Deputy Minister of Mines and Petroleum provided examples of cases in his country.

"Afghanistan was facing that kind of problem. Actually, the time span of influence has been regulated in the law, but the time span is set just two years after the official has not served. It's too short", affirmed Ghazaal. This condition consequently raises its own problems because the extractive companies board filled by former high-ranking officials who were still influential in the contracting process.

The PEP issue did not only occur in the realm of regulation but also in the realm of implementation. The effectiveness of implementation and law enforcement that has not gone well remains a shared problem that faced by many countries. “Poor governance of institutions in running the regulations led 
to inoptimum enforcement”, explained Tetiana Shevchuk, Anti-Corruption Action Center, Ukraine.

In response to this issue, the National Coordinator of Publish What You Pay Indonesia, Maryati Abdullah said that the government needs to ensure the effectiveness of the implementation of PEP. Thus, the transparency and openness can be pursued. She also emphasized the importance of prevention of conflict of interest due to the existence of double power where officials have the authority in the political and economic sector. [AP]

Government-Civil Society Collaborate to Disclose Beneficial Ownership Data in Indonesia

Co-creation between government and civil society is a key to disclose the beneficial ownership (BO) data. This notion was delivered by Raden Siliwanti, Coordinator of Open Government Indonesia in the session on “How Governments and Civil Society can Collaborate to Improve Beneficial Ownership Disclosure”, one of the parallel discussion in the Global Conference on Beneficial Ownership Transparency held in Jakarta on the last 24 October.

The role of civil society in the development process has accommodated by Law No. 25/2004 on the National Development Planning System. Siliwanti continued that, the role of CSO needs to be improved in monitoring and evaluating the performance of government as well as supporting the government in formulating a policy which’s in line with the needs of the people.

Edi Effendi Tedjakusuma, Team Leader of EITI Indonesia who’s also spoke as a panelist, said that the government and civil society has collaborated in the EITI implementation in Indonesia, particularly through the establishment of multi stakeholder group which doesn’t only consist of government and civil society, but also include the business entities.

“On the regard of BO data disclosure, civil society has taken a part since the formulation of the road map of BO transparency in the extractive industries. Besides of public participation, critical aspects needed to pursue BO openness are database system development and supported regulation. Therefore, the draft of presidential decree on BO shall be immediately passed”, continued Edi.

Also presented in the session is Aryanto Nugroho, Manager of Advocacy and Network of Publish What You Pay Indonesia also the civil society representative in the MSG EITI Indonesia. Aryanto emphasized the newest EITI Standard which oblige an active and effective public participation in the whole process of EITI implementation. Participation shall be defined substantively in the planning, implementation, monitoring and evaluation process. In another hand, the government have to ensure an environment which enables public participation.

The similar point also raised by Wahyudi Thohary, representative from Transparency International Indonesia (TII). “Citizen and also local organization need to be empowered in promoting transparency as well as dismantling corruption which hides behind a closed and complex corporate ownership structure”, said Wahyudi. [RG]


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