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New decree to ensure resource transparency
The President has signed a decree appointing a multi-stakeholder working group that will be responsible to ensure public access to data on government revenues from the exploitation of non-renewable resources
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he President has signed a decree appointing a multi-stakeholder working group that will be responsible to ensure public access to data on government revenues from the exploitation of non-renewable resources.
The working group will have the authority to demand information, additional data and input from the central government, regional governments and companies in the oil, gas and mining industries.
Advisor to the President on environmental matters Emil Salim told The Jakarta Post on Thursday the working group would consist of a supervisory team, consisting of five government ministers, himself, and an executive team.
The executive team will comprise of director levels from the Coordinating Economic Ministry, Energy and Mineral Resources Ministry, Finance Ministry, upstream and downstream oil and gas regulators and representatives from regional governments, industry associations and NGOs.
“Companies will have to provide information to the public on how much they pay and to whom. Accountability is what we’re after. There must be transparency and accessibility to information,” Emil said.
Emil said the presidential decree, which was signed on April 23, signified that Indonesia was moving toward adopting the Extractive Industry Transparency Initiative (EITI), a global initiative announced at the World Summit on Sustainable Development in Johannesburg, South Africa in 2002.
Ridaya Laodengkowe of Publish What You Pay Indonesia, a coalition of NGOs for transparency of extractive resources management, said the main task of the working group was to reconcile data of paid revenues from the government and private companies.
The data reconciliation, he said, would curb disputes on revenue distribution between the central and regional governments, and provide certainty to companies in the oil, gas and mining industries.
The contribution of the oil and gas sector to state revenues reached Rp 184.7 trillion (US$20.5 billion) in 2009, down by 39.3 percent compared to Rp 304.4 trillion in 2008 on the back of lower oil prices. By average, the sector contributed about 30 percent of state revenue annually.
The mining sector contributed Rp 42.6 trillion in 2008 and Rp 51.6 trillion in 2009 to state revenues.
Ridaya added that the adoption of EITI practices would also help reduce ecological damage caused by poor management of work concessions given to contractors on natural resources.
EITI senior advisor David W. Brown said countries adopting EITI principles would benefit from an improved investment climate as the management of natural resources would become transparent.
Brown said five countries that had implemented EITI for more than five years had been able to improve their rating in the Transparency International corruption perception index by an average of 10 percent.
Suyitno Padmosukismo, executive director of the Indonesia Petroleum Association, greeted the signing of the decree, saying players in the oil and gas industry were already accustomed to transparency in their business operations.
“However, I don’t think the decree will improve the investment climate. There are other issues more relevant to the climate such as government inconsistencies in sticking to the sanctity of contracts,” Suyitno said. (not)
