Adopt World Bank Initiative to Cut Graft in Resources: NGOs Urge Indonesia

Nivell Rayda Jakarta Globe 3 Sep 10;

Jakarta. Nongovernmental groups are urging the government to participate in the Extractive Industry Transparency Initiative, in a bid to combat corruption and minimize potential revenue losses in the oil, gas, mining and logging sectors.

The Norway-based initiative, sponsored by the World Bank, would put Indonesia on close international watch, ensuring that all state revenue generated by the extractive industry is open for public scrutiny.

Rezki Sri Wibowo, from Transparency International Indonesia, said the nation was suffering from “the curse of resources,” just like other countries with plenty of natural wealth but no transparent government. These nations tend to experience huge economic disparity, uneven development and social unrest despite enormous overall income.

“The [Indonesian] extractive industry has long been tarnished by a lack of transparency, graft, illicit fees and lack of clear regulation and government monitoring,” Rezki said.

“For oil, it is hard to say whether data provided by BPMigas on our oil output is not being manipulated because there is no comparative data and the existing data is not audited externally,” Rezki said in reference to the upstream oil and gas regulator. The mining and logging industries aren’t much more transparent, he added.

The Corruption Eradication Commission (KPK) estimated the state lost Rp 2 trillion ($222 million) based on the oil and gas cost recovery scheme in 2009. BPMigas consequently submitted the misappropriated money to state coffers voluntarily.

“How could there be a miscalculation in the first place? Because information on the subject is not disclosed to the public,” Rezki said.

After joining the initiative, resources companies will have to declare their revenues and an independent team of experts will then compare the information provided with that from the government.

David Brown, Indonesia’s representative to the EITI, said joining the initiative might boost the country’s economy and help combat rampant graft in the extractive industry.

“After implementing EITI for several years, Nigeria’s income from extractive revenue rose as much as $2 billion and its corruption perception index improved by 17 percent,” Brown said.