Indonesia's extractives sector opens up

The first Indonesian EITI report provides information which can be used to improve the governance of Indonesia’s natural resources, including:

• information on the fiscal regime applicable to the sectors and how it has evolved;
• payments and revenues broken down in individual revenue streams, company by company and project by project;
• information about how much oil was allocated to the national government as part of the production sharing agreements; and,
• information about where companies operate and the size of their financial contribution to the government.

On the final point, Erry Riyana Hardjapamekas, the former Head of the Interim EITI Secretariat in Indonesia said:

“This first report provides a tool for Indonesians to help make central and regional governments more accountable. Now, people living in resource rich communities have knowledge regarding how much revenue is being paid by particular companies to the central and regional governments, and can question the extent to which these revenues are being used for the benefit of the people”.

The EITI Report discloses the payments made to the government by 57 oil and gas companies, 18 mineral mining companies and 54 coal mining companies. The figures, as reported by these companies, are published together with the figures that the Indonesian government reports to have received. The largest payments reported were 63% for the share of oil allocated to the Government as part of production sharing agreements for oil and gas, and 29% from the corporate income tax.

Government revenues from the oil, gas, mining and coal sectors in Indonesia reached US$ 24.2 billion in 2009, which amounts to 24% of total government revenue in that year. 83% of revenues reported as being received by the government came from oil and gas companies, 11% from coal companies and 6%  from mining companies.  

Jonas Moberg, Head of the EITI Secretariat, commented on Indonesia's first EITI report.

“Even for a population of 250 million people, US $25 billion represents a huge sum - $100 per citizen. The EITI report gives the foundation for a national debate on whether the right amount of revenue was raised, how well it was managed, and how was it spent.”

Milestone towards a more open government

At the launch of the report in Jakarta, Hardjapamekas commented on the significance of the information being made public.

“With the issuance of Indonesia’s first EITI Report, the government has reached a milestone in transparency, in order to achieve a more open and accountable system of governance. The presentation of public information is one of the most important requirements for Indonesia’s system of governance.”

Over the past three years, Indonesia has shown an economic growth of more than 6%, and foreign investment to Southeast Asia’s largest economy has increased substantially. This natural resource wealth in particular is expected to be an important driver of growth for the years to come as the country holds 3.9 billion barrels of proven oil reserves and 6.1 billion short tons of recoverable coal[1].

Challenges ahead

Indonesia was admitted as an EITI Candidate country on 19 October 2010, with a Validation deadline of 18 April 2013. Upon request by Indonesia’s MSG, citing delays in the implementation process, the Board of the EITI during its meeting on 22 May 2013 decided to extend this deadline to 18 July 2013.