Ridaya Laodengkowe Coordinator, National Coalition Publish What You Pay Indonesia

2

 Capital: Jakarta  Provinces: 33  490 regencies/municipalities  Total Area: 1,919, sq km (741, sq mi, almost three times the size of Texas)  Population (PS 2010), Estimated Population in 2050: 337,807,011  Languages Bahasa Indonesia (official, modified form of Malay)  GDP (2010) $ 672,450 million, Tax Ratio 11,9 % (2010)  Natural Resources petroleum, coal, copper, gold, tin, nickel, bauxit 3

 National Revenue 2011 (estimate): US $ billion  GDP composition by sector: – Agriculture: 14,4% – Industry: 48,1% (including petroleum and mining) – Services: 37,5%  Oil production: 970,000 bbl/day (2011 estimated), last year (2011) targeted 965 but only 947 in realisation  Natural gas production: 56 billion cum (2007 estimate)  Indonesia is a former member of OPEC (until 2008)  Currently Indonesia is a net oil importer (consumes around 1,2 million bopd), but oil and gas is still one of the major export commodity 4

Resources Oil86,9 billion barrel Gas384,7 TCF Coal Bed Methane (CBM)453,30 TCF Coal104,76 billion ton Nickel1,9 billion ton Copper68,96 million ton Bauksit648,88 million ton 5 Source: MENR, February 2009

Revenue Annual Revenue (in million USD) Oil & Gas Revenue 12,1814,2621,0220,5326,35 2. Mining Revenue 1,011,823,274,113,66 a. Tax 0,721,332,543,152,62 b. Non-tax 0,290,490,730,961,05 3. Others revenue 0,020,030,070,140,10 TOTAL 13,2116,1124,3624,7730,12 Total State Revenue 45,3751,2872,2877,9283,69 % contribution of the sector29,1%31,4%36,1%30,2%36,0% Exchange rate (Rupiah/US$) ICP (US$/barel)37,1751,8463,8669,69103,31 Lifting (thousand bopd)

 Resource rich areas tend to have history of vertical conflict (Aceh, Papua) Unsatifaction with revenue sharing ----  Greater autonomy status  receive more natural resources revenue transfer from central government  Resource rich areas tend to have high poverty rate  Excess of decentralisation (since 2000): irresponsible concession awarding by local governments (KP; 7.000): no competitive bidding process, no appropriate regulatory institutions, unclear revenue stream  History of violence and human rights violation in resource rich areas  “Local resource curse”: social-economic problems surrounding mining projects, environmental damages, public facilities disturbances (road, bridges), air pollution 7

 Weak environmental standard applied  Tax evasion  politico business connection, corruption in tax institutions  Lack of transparency  Revenue data available in aggregated, difficult even to reconcile sub-data in National Budget  Contracts of mining are available by request, not PSC documents (including POD, WP and Budget)  Different view among Ministries: Energy and Mineral Resources versus Ministry of Finance and Ministry of Environment 8

..... Some progress 9

 Public financial management reform  Access to public information Law  Extractive Industry Transparency Initiative (EITI) adoption (2010)  Mining Law Number 4/  put some transparency measures  Environment Protection and Management Law  Preparation of Petroleum Law Revision

 Put more transparency in budget process and management  There is space for public engagement, but very limited  Audit of government financial statements (agency by agency) are disclouse  Information of extractive revenue transfer are available, though questions remain  Limited disclousure on (country) revenue from extractive industry

 Initiated by the House of Representative (DPR)  Government agencies mostly do n ot realize the significant of the law  CSOs have been using this for demanding document related to extractive industry  Become the legal basis for adopting EITI

 Government of Indonesia took 2,5 years to come up with Presidential Decree to adopt EITI ---- extensive coordinating works inside government  Become candidate country on December 20, years to achieve compliance country  Bring uniqueness in EITI implementing countries: Oil and gas Mining Sub-national  Promote EITI in regional level ---- ASEAN (Association of South East Asia Nations, 10 countries)

 Growing demand for specific laws  Limited capacity of the House’s members and their staff  Tendency to ‘compete’ with government whose staff are more experienced, or more chance to hire independent experts

 Awareness of the important to draw reform agenda in public finance management (MoF): efficiency, uplift Indonesia position in global arena  Awareness of the important to response to new investment challenges (MoF, MENR)  There are growing concern internationally on the important of transparency and accountability  Need to balance decentralisation with ‘ACCOUNTABILITY’ (MoF, MOHA)