T

he government claims that significant progress has been made in the effort to make Indonesia an Extractive Industries Transparency Initiative (EITI) compliant country, a step that would improve the reputation of Indonesia’s mining industry.

Under the EITI framework, extractive companies are required to submit data regarding taxes and other payments to the government in regard to their exploration and exploitation activities. Government institutions, in this case the Finance Ministry and local administrations collecting revenues from the businesses, are also required to submit data regarding the revenues.

EITI proponents in the country have argued that by being EITI compliant, Indonesia would attract more international investors in extractive industries. Poor governance in the sector, they have said, makes Indonesia less attractive for foreign investment.

The coordinating economic minister’s deputy for energy and mineral resources, Wimpy S. Tjetjep, said Indonesia’s EITI secretariat had received almost all reports from both private industry and government institutions.

“As of now, about 88 percent of the companies have submitted their reports to us, while government
institutions have completed around 86 percent of their data,” he said.

“If everything goes as planned, Indonesia will become an EITI compliant country and this means more transparency over income from the mining sector. This is a crucial step for the country where income from the mining sector can be utilized as capital for development,” he added.

There are at present 33 EITI-compliant countries. Indonesia is hoping to join the initiative, which is supported by the World Bank, within the next two years.

Based on the Office of the Coordinating Economic Minister’s latest data, 15 out of 17 mineral mining companies and 49 out of 54 coal mining companies have completed and submitted their EITI
compliance reports.

The companies that are required to complete and to submit EITI report forms are those that pay at least US$1 million in tax and royalties annually to the state.

Ridaya Laodengkowe, a coordinator of Publish What You Pay–Indonesia, said that he was glad to hear the government had been able to almost complete the necessary reports needed to become an EITI compliant country.

Publish What You Pay – Indonesia is a coalition of watchdogs including Transparency International Indonesia (TII), the Indonesian Forum for Budget Transparency and Indonesia Corruption Watch (ICW).

“If we are able to become compliant with EITI, we will see significant progress in the internal management of the mining sector. As of now, there are still many weaknesses within our state income reporting system from the mining sector,” Ridaya said on Sunday. “In addition, being an EITI compliant country will also enable Indonesia to improve investment climate.”

However, Ridaya also noted that as of now, there was still a crucial element of EITI reports that had not been completed from the government side and that was the list of the tax-paying extractive industry companies. He said that to his knowledge the taxation directorate general had not yet submitted and publicly revealed this list.

“The Taxation Directorate General refuses to publicly reveal the list because they believe taxpayer data are confidential,” Ridaya said.

Previously, taxation director-general Fuad Rahmany had said that it was difficult for the taxation office to completely compile data of small and medium mining companies due to the lack of cooperation from the regional government authorities. There are thousands of small- and medium-size mining companies, but only the big ones have to submit reports to the EITI secretariat.