Researchers at Publish What You Pay ( PWYP ) Indonesia
For over two decades, most of Indonesia’s natural resources such as forests, plantations, minerals and fisheries have been over exploited; however the exploitation has not provided any great added value because they are raw materials.
This exploitation can certainly increase economic growth. In these two decades, Indonesia’s economic growth increased by between 5 percent and 6 percent per year, except when Indonesia suffered economic crises as in 1997-1998 ( Asian economic crisis ) and 2008 ( global financial crisis ).
Unfortunately, the economy is fundamentally fragile. A little global economic shock such as a decline in commodity prices has a direct impact on the Indonesian economy.
This economic system based on natural resources has caused unhealthy business behavior. Investors only focus on establishing dynastic power over natural resources.
There are many ways to achieve the right to control natural resources, including illegal methods, such as monopoly practices, cartels, tax evasion and bribery.
The state as the rightful owner of natural resources is often defeated by the bad practices of exploitation companies.
This has been made worse by poor law enforcement. In other words, law enforcement in Indonesia has been deliberately weakened.
The role of the Corruption Eradication Commission ( KPK ) in conserving natural resources, which began in 2009, needs support from multiple stakeholders. The function of the KPK is not only law enforcement but also building an effective prevention system.
Even though in principle the National Movement on Saving Natural Resources ( GNP-SDA ) initiated by the KPK was started with a prevention aspect; this movement has strengthened the function of prosecution. That is why there have been so many natural resource corruption cases uncovered by the KPK since 2009.
Several activities in the GNP-SDA have had a big influence on the improvement of natural-resources governance. In the mining sector, there has been coordination and supervision conducted by the KPK in coordination with related ministries/agencies and local governments.
This coordination and supervision can improve natural resource governance, particularly over minerals and coal.
The coordination and supervision of minerals and coal project has five targets comprising arranging mining licenses, implementation of companies’ financial obligations, supervision of production, implementation of processing or refining, and implementation of sales monitoring.
Since the formation of coordination and supervision by the KPK in 2014, there have been around 947 non-clear and clean ( CnC ) mining licenses ( IUPs ) that have been revoked or had their terms changed.
IUPs get CnC status if they have been validly issued and conform to the requirements of the Mining Law.
From this supervision and coordination, around Rp 23 trillion ( US$1.75 billion ) in state funds has been saved.
Although there are many things needing to be improved such as an acceleration of mining license governance, supervision in the mining sector has been relatively successful.
The work of the KPK in conserving natural resources does not violate its tasks and functions.
Based on the Corruption Law the KPK has a supervisory role over institutions that are authorized to combat corruption.
The KPK has surveillance, research and review authority over institutions and agencies involved in corruption eradication and carrying out public services.
The success of the KPK in conserving natural resources through coordination and supervision in minerals and coal is the first step for the KPK in conserving natural resources generally, particularly in the energy sector.
The KPK regards the energy sector as a priority in national development based on the 2015-2019 National Medium Term Development Plan to realize energy sovereignty.
In spite of being a priority in national development, the work of corruption eradication has many problems. These problems can be mapped out.
First, currently Indonesia has limited reserves of energy resources. In 2014, the oil reserves totaled 7.37 billion barrels. This consists of 49.14 percent proven reserves and 50.86 percent potential reserves. If proven oil reserves of 3.62 billion barrles are divided by oil production in 2014 ( 289.81 million barrels ), our oil production will only last for 12.5 years, with an assumption that the production and proven reserves are the same as current levels.
Second, there is over exploitation without a strategy to ensure the sustainability of energy security. The production of energy resources such as coal and gas is over exploited, without any consideration about integrating it into energy development.
Third, energy demand increases every year. The growth of the economy and population, leads to an increase in energy demand. Today, the increases in demand are not balanced by the supply of energy. Thus, there are inevitable energy deficits not only for industry but also for household needs. This certainly has a great impact on sustainable development.
Fourth, the bad governance in the energy sector has serious consequences in corruption practices in this sector. These begin with exploitative energy development principles based on market mechanisms and the unclear rule of law. Therefore, the growth in corruption practices involves business and government actors.
We therefore appreciate the KPK’s efforts in protecting the energy sector. At least, there are three goals which can be achieved: an improvement of data and information in the energy sector, improvement of governance and corruption prevention in the energy sector.
These things should cover all the value chain in the energy sector such as minerals and coal, oil and gas, electricity and renewable energy.
If this goes as smoothly as we expect, there will be great improvements in efforts to realize energy sovereignty.
These hopes will not be realized if there is no support from all stakeholders, particularly support from the President.
It needs instructions from the President because this is a coordination and supervision agenda that will involve many stakeholders. We cannot only rely on the KPK.
We need the government’s involvement.
The writers are researchers at Publish What You Pay ( PWYP ) Indonesia.
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