The administration of President Susilo Bambang Yudhoyono is slated to issue its last package of economic policies later this month to help expedite private investment and spur economic growth ahead of next year's elections.

Part of this large package will aim to improve transparency in the revenues and management of the energy and mining sectors. It is encouraging that Indonesia wants to improve the transparency of information on extractive sector revenues.

But rather than seeking to do this in the abstract, it would be more productive if the President simply decided to adhere to what is now the current international standard for oil, gas and mining transparency, the Extractive Industries Transparency Initiative (EITI).

The EITI has now been voluntarily joined by 22 resource-rich countries around the world. Countries that sign up to EITI require oil, gas and mining firms located within their jurisdictions to report the amount of revenues that they have conveyed to the government, and also require government agencies to report how much revenue was collected from these firms.

The two sets of independently reported figures are then cross-checked under the supervision of a multi-stakeholder committee made up of government, civil society and companies. The results are made public.

The coalition that I lead, Publish What You Pay -- Indonesia, made up of 45 non-governmental organizations from seven of Indonesia's most resource-rich provinces, called on the government last November to endorse the EITI. We repeated that call at the worldwide meeting of the UN Convention Against Corruption in January of this year. We see four clear advantages that would accrue to Indonesia if it were to join the EITI.

First, EITI would help to reduce corruption, especially in the extractive sectors where this problem is rife. The root of resource sector corruption stems from the fact that oil, gas, minerals and coal can be produced relatively cheaply, but are then sold on world markets at high prices.

The difference between low production costs and high prices is then captured by government in the form of revenues. So far so good. But the problem arises from the fact that such revenues tend to disappear once they are in the hands of government. Those who are skeptical that this could take place in Indonesia should consider just one word: Zatapi (crude oil).

Looking around the world, it is worth noting that those nations that implement the EITI for five years or longer improve their position in the Transparency International Corruption Perceptions Index by almost 10 percent.

A second benefit of the EITI is that it would improve our nation's economic health. Rising international oil prices are putting our government in a fiscal squeeze. To deal with this, the government is raising the prices of domestic fuels.

But the government also needs to reduce fiscal pressure, which could be done by increasing the efficiency with which certain extractive industry revenue streams are managed. How could this help? To give just one example, according to the Indonesian Finance Ministry's website, revenue earned from the government's sale of production sharing oil fell dramatically from Rp 125.1 trillion in 2006 to only Rp 78.2 trillion in 2007.

Production sharing oil contributions to total government revenues fell from 20 percent of all revenues in 2006 to only 11 percent in 2007.

How did it come to pass that nearly 10 percent of all the government's revenues evaporated in a single year? Hopefully we will all find out one day. But in the meantime, the EITI could at least help us keep better track of how such large extractive industry revenue streams are managed, and if we are lucky increase the amount of revenue that ends up in our treasury.

A third area where Indonesia could benefit from the EITI is by improving its investment climate. In the midst of a global scramble for oil resources, 22 of Indonesia's 60 oil and gas basins remain unexplored.

In the mining sector, no new major investments have occurred in the last decade. Why is investment in Indonesia's extractive sectors so anemic? Research by PriceWaterhouseCoopers shows that one of the main reasons that many oil, gas and mining firms elect not to invest in Indonesia is that they do not understand our revenue system.

EITI, by making information publicly available on what revenues are paid by oil, gas and mining companies to government, and why, would go a great distance toward lowering information costs for new investors, and increasing their incentive to invest.

Finally, the EITI represents an opportunity for Indonesia to assume a much-deserved position of world leadership. Indonesia is the world's most populous resource-rich nation, and is the only country in the world classified by the IMF as both rich in oil and gas and rich in minerals. For this reason, if it were to join the EITI, Indonesia would automatically assume a position of natural authority within the initiative.

Even though Indonesia has not joined the EITI, the international chair of the initiative has already asked Indonesia to help the EITI develop better methods for keeping track of production sharing oil, as well as better means of keeping track of revenues shared by national with local governments.

We applaud the government's intention to improve revenue transparency in the energy and the mining sectors. It will be very helpful for the government to communicate its good intentions in this area by joining up to what is now the current international standard for oil, gas and mining transparency, the EITI.

The writer is a member of the Executive Committee of Indonesian Corruption Watch and was elected to lead Publish What You Pay -- Indonesia.

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